SHRI/RDS 2014 Survey on Business Prospects/Wage Increase/Bonus & Missing Link in Productivity.
RDS surveyed 123 companies in December 2013 to find out about their business prospects, wage, bonus and recruitment plans.
Companies were also asked for their views on the missing link (employee attitude & organisational culture) in productivity.
2.0 Summary of Key Findings
2.1 Companies are slightly more optimistic than six months ago but are still somewhat careful on wage increases, bonuses and recruitment.
2.2 2013’s basic wage increase averaged 4.1 to 4.3% slightly higher than the 4.0% in 2012;
- for 2014, it is expected to be similar to last year’s levels at around 4.1 to 4.2%.
2.3 Last year’s variable bonus (excluding AWS) averaged 1.8 to 2.1 months;
- for 2014, they are also likely to be maintained at 1.8 to 2.1 months
2.4 The total wage increase for 2013 was 5.0%, and with the Consumer Price Index at 2.4%; the real wage increase was 2.6%;
- for this year, the total wage increase is expected to be 4.0%, and with CPI expected to be around 2.8%, real wages are expected to increase by 1.2%
2.5 On recruitment, 81% of companies hired staff in 2013, higher than the 78% in 2012;
- this year, however, not only are there less companies hiring (67%) but the number to be hired is also expected to be lower.
2.6 Fewer companies retrenched, 6% in 2013 compared to the 12% in 2012.
- for this year only 4% of companies, so far, expect to retrench.
2.7 Staff turnover was higher in 2013 than the year before;
- for 2014, less companies are expected to experience staff turnover, 54% compared to 90% in 2013 and the turnover rate is also expected to be slightly lower.
2.8 Entry-level salaries hardly increased except for GCE ‘O’ and Higher Nitec qualifications which increased by only $50 compared to six months ago.
2.9 On the missing link to productivity, it is interesting that while practically all companies agree that Employee Attitude and Organisational Culture affect productivity, less than a third think that emphasis on HR practices is paramount;
- we think this is a disconnect between what HR and top management truly believe and practise and unless this is bridged, companies are missing out on this crucial link in productivity improvement.
3.0 Key Findings
3.1 Business Prospects
Current: 88% of companies reported satisfactory or better business prospects compared to 85% in June last year
- the most satisfied sectors are Construction, Education, F&B/Hotels and IT/HiTech.
Fewer companies reported unsatisfactory business prospects 12% compared to 15% six months ago
- the least satisfied sector is still Consumer Products/Retail, similar to six months ago.
European companies were the most satisfied (100% satisfied or better) followed by Japanese (96%) and local companies (84%). US companies were the least satisfied (78%).
Large companies fared better than the rest (97% satisfied or better compared to 83% of small and medium-sized companies).
Next 6 months: 23% of companies expect prospects to improve, 73% expect no change while 4% expect prospects to worsen.
- Trading is the most optimistic sector,
- Electronics sector is the least optimistic.
European companies are most optimistic over next 6 months, (were the least optimistic last year) while US companies are the least optimistic.
In terms of size, large and small companies are optimistic, while medium companies are least optimistic.
3.2 Basic Wage Increase
The wage increase in 2013 averaged 4.1 to 4.3%, higher than the 4% in 2012.
Highest Paying Sector : Financial/Insurance (6.7 to 8.4%)
Lowest Paying Sector : Construction and Related (2.6%).
In 2013, 3% of companies froze wages, less than the 11% in 2012.
For this year 2014, the wage increase will average 4.1 to 4.2% with only 2% of the companies planning to freeze wages; as for wage cut, no company is planning to do so.
For 2014, the sector expecting the highest wage increase continues to be Financial/Insurance (5.9% to 6.9%). And for the lowest wage increase, it is the 3.2 to 3.5% of the Logistics sector.
While large companies expect a wage increase of only 3.9% this year, the medium and small companies expect to pay 4.1 to 4.5 %.
Asia Pacific companies, on the other hand, which paid the highest increases of 5% to 6% also expect to pay the highest increases of 5 to 5.7% this year.
3.3 Variable Bonus (excluding AWS)
For 2013, the variables bonuses averaged:
2.1 months for Managers
1.9 months for Executives
1.8 months for Non-executives.
Highest Paying Sector – Oil & Gas (2.4 to 3.4 months)
Lowest Paying Sector – Consumer Products/Retails at 0.8 month
Large companies paid higher bonuses (2.3 to 2.7 months) than the 1.5 to 1.8 months of the small and medium-sized companies.
Slightly more companies in 2013 paid bonuses, 90% compared to the 89% in 2012.
For this year 2014, 82% of companies expect to pay some form of bonus and the bonuses are expected to be:
2.1 months for Managers
1.9 months for Executives and
1.8 months for Non-executives.
The highest bonus paying sector next year will be Financial/Insurance sector which expect to pay bonuses at 2.9 to 3.4 months while the lowest paying sector, will continue to be Consumer Products/Retails sector at 0.8 months.
In 2013, 85% of companies paid an average of 1.1 month while for next year only 82% of companies expect to pay the AWS.
In 2013, a total of 81% of the companies hired staff, higher than the 78% in 2012.
For this year 2014, 67% of the companies plan to hire staff.
The average number recruited per company in 2013 and the number to be recruited this year are:
16% of companies froze recruitment in 2013 and for this year, 15% expect to freeze recruitment.
6% of companies retrenched in 2013, slightly fewer than the 12% in 2012.
For this year, 4% of the companies, so far, plan to retrench.
3.7 Staff Turnover
Last year, 90% of companies experienced staff turnover, higher than the 84% in 2012.
The annual turnover rate for 2013 averaged:
5% for Managers
8%for Executives and
9% for Non-Executives.
For this year less companies (54%) are likely to experience staff turnover and the turnover rate is also expected to be slightly lower.
3.8 Total Accumulated Monthly Variable Component (MVC) in %
Slightly more companies, 53% compared to 56% in 2012, paid the MVC in 2013 and the average accumulated amount is more than the 7.8 to 8.5% in 2012. In 2013 the MVC averaged:
9.5% for Manager
9.2% for Executives
9.4% for Non Executives.
3.9 Entry-Level Salaries
Little change in Entry-level salaries, compared to six months ago. There was only a slight increase of $50 or 3.3% to 3.6% for GCE “O” and Higher Nitec holders.
3.10 Missing Link in Productivity & Innovation Improvement
When Microsoft abolished employee ratings recently in order to improve teamwork and innovation, we were reminded that some companies only pay lip service to HR practices so we set out to find out how many companies truly believe in good HR practices and “walk the talk”.
And, although, international research and our surveys have shown time and time again that employee attitude, satisfaction and commitment have a great impact on productivity and innovation, these factors are hardly the focus and priority of top management.
Hopefully by asking companies how important really are Employee Attitudes and Organisational Culture and which management practice affect productivity most, we would get an idea.
The results are somewhat surprising.
While practically all companies agree that Employee Attitudes and Organisational Culture affect productivity, it is somewhat surprising that less than a third of companies think that emphasis on HR practices is paramount.
Consequently, there is a disconnect between what HR can do and what top management actually does. It is apparent that unless HR can influence top management to “walk the talk”, they are missing out on this crucial link in productivity & innovation improvement.
3.10.1 Employee Attitudes and Organisational Culture
98% of companies agree employee attitudes can affect productivity, while the other 2% are unsure.
For Organisational Culture, 97% of companies agree it can affect productivity, while 1% disagreed.
3.10.2 Managerial Practice that Most affect Productivity
If you wish to participate in any of our future surveys, click here