Thanks to CPI inflation real total wages rose by 5.4 percent in 2015, says MOM

The Ministry of Manpower released its 2015 Report on Wage Practices today. In the report it said that compared to 2014, fewer firms were profitable in 2015, but that despite that, accounting for negative inflation in 2015, real wage growth picked up pace. The main findings in the report said:

1. Nominal total wages in the private sector grew by 4.0% in 2015, lower than the 4.9% increase in 2014. When employer Central Provident Fund (CPF) contributions are factored in, growth in total wages remained stable at 4.9% in 2015, due to the increase in employer CPF contributions in 2015¹. Accounting for the -0.5% CPI inflation², real total wages including employer CPF contributions rose by 5.4% in 2015, compared to 3.9% a year ago³.

   Fewer establishments were more profitable than the previous year, while those that were less profitable or incurred losses rose

79% of private establishments reported that they were profitable in 2015, down from the 82% in 2014. Specifically, the proportion of establishments which were more profitable⁴  (2015: 12%, 2014: 16%), or as profitable (2015: 29%, 2014: 34%) declined. On the other hand, establishments which were profitable but did not do as well as the previous year (2015: 38%, 2014: 32%), or incurred losses (2015: 21%, 2014: 18%) rose.The proportion of employees covered under a flexible and performance-based wage system remained high in 2015

Most employers put in place some form of flexible and performance-based wage system. Specifically, 90% of private sector employees were under some form of flexible wage system in 2015, the highest since 2004. Having a narrower maximum-minimum salary ratio remained the most common wage recommendation adopted, covering two in three (66%) private sector employees in December 2015. This was followed by linking variable bonus to Key Performance Indicators (KPI) (52%) and having the Monthly Variable Component (MVC) (32%) in the wage structure.

Smaller proportion of establishments raised wages in 2015 than a year ago

64% of private establishments raised the total wages of their employees in 2015, down from 72% in 2014. Correspondingly, there was an increase in the proportion of firms which kept wages unchanged from the previous year (2015: 25%, 2014: 20%), and to a smaller extent, cut wages (2015: 11%, 2014: 7.7%).

The report is available online on the Ministry of Manpower’s website at http://stats.mom.gov.sg/Pages/Home.aspx.