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4Report On Wages In Singapore, 2008 and Singapore Yearbook of Manpower Statistics, 2009

1.   In December 2008 when Singapore's Gross Domestic Product (GDP) for the quarter contracted over the year by 4.2%, two in five private establishments reported that they foresaw a need to cut wages in 2009, if business conditions worsened. Establishments with a Monthly Variable Component (MVC) in their wage structure were more confident of gaining their employees' acceptance of a wage cut, if it has to be implemented compared with establishments without MVC.

2.   These are some of the findings of the `Report on Wages in Singapore, 2008' published by the Ministry of Manpower's Research and Statistics Department. The 320-page Report presents information on wages of over 400 occupations as well as wage changes and bonuses paid in various industries. It also includes information on the extent to which employers have restructured their wage systems. The key findings are summarised in the Annex.

3.   Besides the `Report on Wages in Singapore, 2008', the department has also published the ‘Singapore Yearbook of Manpower Statistics, 2009' which provides a wide range of statistics on the labour market situation. These include key data on the labour force, job vacancies, wages, redundancies, labour turnover, hours worked, conditions of employment, labour relations, workplace injuries, higher education and skills training. The information provided in the two publications can help job seekers, employers and employees make better informed decisions on career and human resource matters. It also enables analysts to gain a better understanding of the Singapore labour market.

4.   The two annual statistical publications can be downloaded from the Ministry of Manpower's website.


Key Findings of Report On Wages In Singapore, 2008

Wage Restructuring

•   Only a small minority (1.7%) of private establishments with MVC in their wage structure cut the component in 2008, given that the economic conditions deteriorated sharply only from the last quarter of 2008 when GDP contracted over the year by 4.2%.

•   In December 2008, two in five establishments (40%) employing 44% of the private workforce reported that they foresee a need to cut wages in 2009, if business conditions worsen. Another 32% of establishments employing 29% of the workforce had not thought about this issue. The top two common measures of wage cut are cutting the annual variable component (74% of establishments) and basic wage (47%), followed by MVC (15%) as the latter was weighed down by establishments without MVC. Nevertheless, the majority of the firms with MVC intend to cut annual variable bonus (76%) and/or MVC (69%) when reducing wages. Establishments with MVC were more confident of gaining their employees' acceptance of a wage cut, if it has to be implemented in 2009 compared with establishments without MVC; only 24% of MVC establishments foresaw difficulty compared with 29% for establishments without MVC.

•   As at December 2008, 84% of the workforce in the private sector was under some form of flexible wage system, same as a year ago. Large establishments (employing 200 or more employees) continued to lead in the implementation, with the vast majority (90%) of their workforce having at least one key wage recommendation in their wage system, compared with 75% in small and medium enterprises. These were comparable to the corresponding figures of 89% and 77% in 2007.

•   Narrowing the maximum-minimum salary ratio (involving 58% of workforce) remained the most common recommendation adopted by the private sector. This was followed by linking variable bonus to KPI (54%) and having MVC (34%) in the wage structure. The share of workforce with variable bonus linked to KPI rose over the year from 52%, while the share working in establishments that had narrowed/were narrowing the wage ratio declined from 62%. The coverage of workforce with MVC also dipped slightly from the preceding year (35%). Both the larger and unionised establishments continued to lead in adopting each of the three recommendations.

Wage Change

•   With the economic downturn and increased business costs in 2008, employers were more restrained in granting salary increases. Total wages comprising basic wages and bonuses in the private sector rose by 4.2% in 2008, down from the growth of 5.9% in 2007. The moderation in total wage increase in 2008 stemmed from the drop in bonus payout from 2.36 months in 2007 to 2.31 months in 2008 (-2.1% as opposed to an increase of 8.3% in 2007). The basic wage increase (4.4%) was broadly unchanged from 2007 (4.3%).

•   Reflecting slower GDP growth and strong employment gains in the first half of 2008, labour productivity declined by 7.8%, deeper than the drop of 0.8% in 2007. While real wages also declined in 2008, the drop (total: -2.3%; basic -2.1%) was less than the contraction in productivity (-7.8%). Consequently, real wages outpaced productivity growth for the fourth straight year. To minimize cyclical effects, productivity trends are often analyzed over a longer period, preferably over the course of a business cycle. Over the seven years from 2001 to 2008, growth in productivity (1.9% p.a.) had kept pace with gains in total (1.7%) and basic (1.3%) wages.

Occupational Wages

•   Occupations requiring higher skills and knowledge continued to command higher wages. In June 2008, the median monthly gross wages was the highest for managers ($6,400), followed by professionals ($4,405) and associate professionals & technicians ($3,000). Clerical ($1,960) and sales & service workers ($1,849) were paid close to $2,000. Among blue-collar occupations, the production craftsmen ($2,137) and plant & machine operators ($2,009) were paid much more than the group of cleaners, labourers & related workers ($975).

•   Wages are generally observed to rise with age as workers gain experience and skills and become more productive over the years. The pace of wage increase with age is more pronounced among managers and professionals as their work is generally more knowledge intensive. This was especially true among professionals where wages rose with advancing age groups, peaking for those aged 60-64 in 2008. In lower-skilled and blue-collar occupations, wages generally rose more gradually and peaked earlier for those in the late thirties or early forties.