Report on Wage Practices 2014
Wages continue to grow; proportion of employers adopting flexible and performance-based wage system rose to a decade-high in 2014
- Employers continued to give wage increases amid the tight labour market in 2014. Low-wage workers continued to see wage increments. Similar to previous years, firms continued to respond positively to tripartite recommendations on wage restructuring. Most employers have adopted some form of flexible and performance-based wage system, with the proportion hitting a decade-high in 2014. These are the key findings from the “Report on Wage Practices, 2014” released by the Manpower Research and Statistics Department, Ministry of Manpower.
- Total wages (including employer CPF contributions) in the private sector rose by 4.9% in 2014, slightly slower than in 2013 (5.3%). As inflation eased1, real total wages (including employer CPF contributions) rose at a faster pace of 3.9% in 2014, compared with 2.9% in 20132.
- 59% of private establishments with employees earning a monthly basic salary of up to $1,000 gave or intended to give wage increases to these employees in 2014, lower than the 77% in 2013 but similar to the 60% in 2012. Since the introduction of the National Wages Council (NWC) quantitative guidelines in 2012, the proportion of full-time resident employees earning a monthly basic salary of up to $1,000 is estimated to have decreased from 9.8% in 2012 to 6.8% in 2014. Of the remaining private establishments that did not grant wage increases, about half (20%) indicated that they were already paying market rate, while others indicated that their business was not doing well and the impact on business/wage costs. Among low-wage employees (earning basic monthly salary of up to $1,000) who were given the built-in wage increase in 2014, their basic wage increase averaged 14.2%, higher than the 8.4% received by all rank and file employees.
- There has been a general uptrend in the implementation of the tripartite wage restructuring recommendations since their release in January 2004. This resulted in a large majority (89%) of employees in the private sector being under some form of flexible wage system in 20143, the highest since June 2004. Having a narrow maximum-minimum salary ratio remained the most common wage recommendation adopted, with two in three (66%) private sector employees working in such establishments in December 2014. This was followed by linking variable bonus to Key Performance Indicators (KPI) (52%) and having the Monthly Variable Component (MVC) (33%) in the wage structure.
For More Information
- The report is available online on the Ministry of Manpower’s website at MOM's Statistics and Publications webpage.
Inflation, as measured by the change in Consumer Price Index (CPI) for all items, eased to 1.0% in 2014 from 2.4% in 2013.
Data pertain to the average wage increases granted by private sector establishments (with at least 10 employees) to full-time resident employees in continuous employment for at least a year.
The three key wage recommendations are:
(1) implement variable bonus linked to Key Performance Indicators (KPI);
(2) introduce the Monthly Variable Component (MVC) in wage structure;
(3) narrow the maximum-minimum salary ratio for the majority of their employees to average of 1.5 or less.