SHRI/RDS 2012 Survey on Business Prospects/Wage Increase/Bonus, Recruitment & NWC Guidelines for Low Wage Workers.
RDS surveyed 167 companies in June 2012 to find out about their business prospects, wage, bonus and recruitment plans. Companies were also asked for their views on NWC Guidelines for low wage workers and how top management can increase the latter s’ productivity.
2.0 Summary of Key Findings
Still optimistic but somewhat cautious.
2.1 The first half of this year has turned out to be better than expected.
With optimism, probably, spilling over from the last six months, companies are slightly more optimistic for the next six months. However, due to the sluggish US recovery, the continuing euro crisis and China’s slowing growth, most companies are, not surprisingly, cautious about next year’s wage increases, bonuses and recruitment.
2.2 The basic wage increase in 2012 will average 4.1% for the full year, similar to that for last year. For next year 2013, the basic wage increase is expected to remain at 4.1%.
2.3 Variable bonuses (excluding AWS) are expected to average 1.6 to 2.0 months this year, lower than the 2.2 months in 2011. For 2013, they are expected to drop further to 1.6 to 1.9 months.
2.4 The wage increase and lower bonus this year means a total wage increase of only 1.5% and with the consumer price index expected to increase by 4.2% there will be a drop in real wages of around 2.7%.
For 2013, the total wage increase is expected to be 3.1% and with inflation expected to be around 3.0%, real wages are likely to increase by only 0.1%.
2.5 On recruitment, 83% of companies hired or planned to hire staff this year (higher than the 77% in 2011), and for 2013, only 58% are expected to hire.
2.6 This year, 8% of companies retrenched or plan to retrench staff (more than the 3% in 2011) and for 2013, the good news is that only 1% expect to retrench.
2.7 Staff turnover declined slightly this year to 4% to 6% and is expected to continue to drop further in 2013 to 3% to 6% next year.
2.8 Most entry-level salaries increased by 1.9% to 9.1% compared to six months ago; those for PSC (Secretarial), Diploma (Engineering) and Degree (non Engineering) remained unchanged.
2.9 On NWC Guidelines for low wage workers, most companies (78.4%) are in agreement with 64% of them expecting little or no impact on their overall wage costs.
2.10 However, companies feel that top management can do more to help low wage workers increase productivity by re-designing jobs to enrich job quality/career ladders (68%) and providing special soft skills/learning training (57%).
2.11 As to whether NWC needs a makeover, 73% think that more representation & guidelines for different sectors should be included (73%) and more feedback from industry associations and focus groups should be solicited more proactively (66%). Only 9% feel that the current format should be retained.
3.0 Key Findings
3.1 Business Prospects
Current: 83% of companies reported satisfactory or better prospects; although this is slightly lower than the 86% six months ago, it is better than expected
- the most satisfied sector is the Education sector.
17% of companies reported unsatisfactory business prospects, compared to 14% six months ago with the least satisfied sector being electronics manufacturing.
European companies are doing, relatively, less well with 71% compared to the 82% or more of Japanese, local, US and Asia Pacific companies that reported satisfied or better business prospects.
Large companies fared better than the rest (95% satisfied or better) compared to 81% of small and 78% of medium-sized companies.
Next 6 months: 15% of companies expect prospects to improve, 78% expect no change while 7% expect prospects to worsen.
- the Oil & Gas sector is the most optimistic while the F&B/Hospitality and Electronics Manufacturing sectors are the most pessimistic.
Surprisingly, European companies are the most optimistic over the next 6 months, while Asia Pacific companies are the least optimistic.
The small companies are the most optimistic.
3.2 Basic Wage Increase
The wage increase this year (2012) will average 4.1%, similar to last year’s.
Highest Paying Sector : Financial/Insurance (4.7 to 4.9%) and
Services (4.1 to 5.5%)
Lowest Paying Sector : Electronics Components Trading (2.5 to 2.8%).
Local companies will pay the highest increases (4.1 to 4.4%) while US and Asia Pacific companies the lowest (3.9%).
In terms of size, large companies will pay the highest (4.3%).
8% of the companies have frozen or plan to freeze wages, slightly higher than 3% last year; and none has cut or plan to cut wages.
For 2013, the wage increases are expected to remain the same as this year, around 4.1%.
For 2013, the highest wage increase sector is Services which expect to pay 4.5% to 4.8% while the lowest wage increase sector is the Electronics Manufacturing sector with only 3.1% to 3.5%.
Interestingly, the Construction & related sector, which employs the most foreign workers, expect to pay their non-executives 5.5% but only 3.7 % to their executives and managers.
3.3 Variable Bonus (excluding AWS)
For this year 2012, the variables bonuses will average:
2.0 months for Managers
1.8 months for Executives
1.6 months for Non-executives.
Highest Paying Sector - Oil & Gas (2.8 to 3.4 months)
Lowest Paying Sector - Consumer Products/Retails (0.8 to 1.0 months)
Large companies will pay somewhat higher bonuses (2.1 to 2.5 months) than the medium-sized and small companies.
Local companies, on the other hand, expect to pay slightly more (1.8 to 2.2 months) than Asia Pacific, European, Japanese and US companies.
In 2012, 90% of companies paid or plan to pay bonuses compared to 87% in 2010.
For next year 2013, not only are there less companies (75%) expecting to pay some form of bonus but the bonuses are expected to decrease slightly to an average of:
1.9 months for managers
1.7 months for executives and
1.6 months for non-executives.
The highest paying sector will be Financial/Insurance which expect to pay an average of 2.8 months while the lowest paying sector, Electronics Components Trading expect to pay only 0.8 month.
In 2012, 90% of companies paid the AWS of one month while for 2013, only 83% of companies expect to do so.
A total of 83% of the companies hired or plan to hire staff in 2012. For next year 2013, less companies (58%) plan to hire staff and the number to be hired will also be lower.
The average number recruited per company in 2012 and the number to be recruited next year are:
8% of the companies retrenched or plan to retrench staff in 2012, higher than the 3% in 2011. For next year only 1% expect to retrench.
3.7 Staff Turnover
81% of companies experienced staff turnover in 2012, slightly lower than the 88% in 2011.
The annual turnover rate for this year will average:
4% for Managers
6% for Executives and
6% for Non-Executives.
For next year, only 43% of companies are likely to experience staff turnover and the turnover rate is also expected to be lower.
3.8 Total Accumulated Monthly Variable Component (MVC) in %
44% of companies currently pay the MVC and the average accumulated amount is 9.8% (Managers), 9.9% (Executives) and 11.3% (Non Executives).
3.9 Entry-Level Salaries
Most entry-level salaries increased by 1.9% to 9.1% compared to six months ago; those for PSC (Secretarial), Diploma (Engineering) and Degree (non Engineering) remained unchanged.
3.9 NWC Wage Guidelines For Low Wage Workers
Most companies (78%) are in agreement; 12% are not sure and only 7% disagree.
3.11 Impact of NWC Guidelines
64% of companies expect little or no impact while 33% are likely to incur higher wages costs.
The encouraging news is that out of the 33% that are likely to incur higher wage costs, most of them (70%) plan to re-design to enrich job quality and career ladders.
3.12 Productivity of Low Wage Workers
The good news is that 68% of companies plan to re-design to enrich job quality and career ladders; 57% will provide special soft skills/learning training while 44% plan to improve work culture/trust, collaboration & respect for workers and 19% will provide targeted counseling/mentoring/buddy services.
3.13 Makeover for NWC
With only 9% preferring to retain the existing format, most companies feel improvements are necessary and their specific comments are:
- include more representations & guidelines from different industry sectors - 74%
- get feedback from industry associations & focus groups more pro-actively – 66%
- broaden scope to cover business costs limits – 42%
- do away with NWC totally – 2%
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