RDS 2014/2015 Survey on Business Prospects/Wage Increase/Bonus & Skills vs Degree.
RDS surveyed 110 companies in October 2014 to find out about their business prospects, wage, bonus and recruitment plans.
As productivity is still an ongoing concern, Companies were also asked for their views on how they are investing to improve productivity. As for the skills vs degree qualification issue their views were also sought as this issue is particularly important to both employees and employers.
2.0 Summary of Key Findings - Fourth Year of Cautious Optimism
2.1 Companies are slightly less optimistic than a year ago so it is no surprise that they continue to be careful on wage increases, bonuses and recruitment as they have been for the last four years since 2010 after the recovery from the global financial crisis.
2.2 The wage increase in 2014 averaged 4.1 to 4.3%. This increase is not only similar to last year’s but also that of the past four years. Not surprisingly next year’s increase is also projected to be around the same but slightly lower range of 3.9 to 4.1%.
2.3 This year’s variable bonus (excluding AWS) will average 1.7 to 2.1 months;
- for 2015, they are likely to be slightly lower at 1.6 to 2.0 months
2.4 The total wage increase for 2014 is 4.3%, and with the Consumer Price Index at 1.8%; the real wage increase is 2.5%;
- for 2015, the total wage increase is expected to be 3.3%, and with CPI expected to be around 2.2%, real wages are expected to increase by 1.1%
2.5 This year, 83% of the companies hired staff, higher than the 80% in 2013;
- next year, however, not only are there less companies intending to hire (65%) but the number to be hired is also expected to be lower.
2.6 More More companies retrenched staff this year, 10% of the companies compared to the 6% in 2013; for next year only 1% of the companies, so far, plan to retrench.
2.7 This year, 86% of companies experienced staff turnover, less than the 90% in 2013; next year, fewer companies (50%) are likely to experience staff turnover and the turnover rate is also expected to be slightly lower.
2.8 Vocational entry-level salaries including those for diploma (Engineering) and Degree (Others) increased by 3 to 7% compared to last year.
2.9 To improve productivity most companies are investing in task-oriented measures like work processes and training rather than work culture. However, this may be somewhat unfortunate as having the right culture can not be over-stated as it has an important impact on all other productivity-related factors.
2.10 On the question of Skills vs Degree Qualification, most companies (96%) responded that job-fit/skills are not only emphasised over and above degree qualification but practically all of them have undertaken some measures to reinforce this such as providing continous learning/training and recruiting for job-fit/skills rather than sheer qualifications.
3.0 Key Findings
3.1 Business Prospects
Current: 80% of companies reported satisfactory or better business prospects; this is lower than the 88% in December 2013;
- the most satisfied sectors are Chemicals, F&B/Hotels, Healthcare/Pharmaceuticals and Services.
More companies reported unsatisfactory business prospects 20% compared to 12% last year.
- the least satisfied sector is still Consumer Products/Retail, similar to last year.
Japanese and US companies were the most satisfied (90% satisfied or better) followed by European (83%) and Asia Pacific companies (75%). Local companies were the least satisfied (72%).
Large companies fared better than the rest (90% satisfied or better compared to 71% of small and medium-sized companies).
Next 6 months: 15% of companies expect prospects to improve, 79% expect no change while 6% expect prospects to worsen.
- Marine/Shipping is the most optimistic sector,
- Engineering sector is the least optimistic.
Japanese companies are most optimistic over next 6 months, while US and Local companies are the least optimistic.
In terms of size, large companies are optimistic, while medium and small companies are least optimistic.
3.2 Basic Wage Increase
The wage increase in 2014 averaged 4.1 to 4.3% similar to that of last year.
Highest Paying Sector : Trading (4.6 to 5.2%)
Lowest Paying Sector : Electronics (2.8 to 3.3%).
In 2014, 1% of the companies cut wages; more companies froze wages 7% of companies compared to 3% in 2013.
For next year 2015 it is projected to be also around this range but slightly lower at around 3.9 to 4.1%.
For 2015, the sector expecting the highest wage increase continues to be Trading (4.2% to 5.0%). And Electronics sector continues to be the lowest wage increase, 2.6 to 3.0%.
While large companies expect a wage increase of only 3.9% this year, the medium sized companies expect to pay 4.0 to 4.3 %.
Small companies expect a smaller wage increase (3.7 to 4.0%) compared to last year (4.2 to 4.5%).
Overall, Japanese companies which paid the highest increases of 4.1 to 4.5% also expect to pay the highest increases of 4.1 to 4.3% for 2015.
3.3 Variable Bonus (excluding AWS)
For 2014, the variables bonuses will average:
2.1 months for Managers
1.8 months for Executives
1.7 months for Non-executives.
Highest Paying Sector – Healthcare/Pharmaceuticals (2.7 to 3.0 months)
Lowest Paying Sector – Electronics (0.7 to 1.1 months)
Large companies will pay higher bonuses (2.6 to 3.1 months) than the 1.4 to 1.9 months of the small and medium-sized companies.
Slightly less companies paid bonuses, 88% compared to 90% in 2013.
For next year 2015, 83% of companies expect to pay some form of bonus and the bonuses are expected to be:
2.0 months for managers
1.8 months for executives and
1.6 months for non-executives.
The highest bonus paying sector next year will be Logistics sector which expect to pay bonuses of 2.8 to 3.8 months while the lowest paying sector, will be Consumer Products/Retails sector at 0.7 to 0.9 months.
The wage increase in 2014 is 4.3 % and for next year it is expected to be 3.3%.
With CPI this year expected to at 1.8%, the real wage increase this year is around 2.5% while next year it is projected to be lower at 1.1%.
In 2014, 88% of companies paid an average of 1.1 month while for next year only 85% of companies expect to pay the AWS
In 2014, a total of 83% of the companies hired staff, higher than the 80% in 2013.
For next year 2015, 65% of the companies plan to hire staff.
The average number recruited per company in 2014 and the number to be recruited next year are:
17% of companies froze recruitment in 2014 and for next year, 15% expect to freeze recruitment.
More companies retrenched staff this year, 10% of the companies compared to the 6% in 2013.
For next year only 1% of the companies, so far, plan to retrench.
3.8 Staff Turnover
This year, 86% of companies experienced staff turnover, less than the 90% in 2013.
The annual turnover rate for 2014 averaged:
5% for Managers
8%for Executives and
8% for Non-Executives.
For next year fewer companies (50%) are likely to experience staff turnover and the turnover rate is also expected to be slightly lower.
3.9 Total Accumulated Monthly Variable Component (MVC) in % of Monthly Salary
Slightly fewer companies, 50% compared to 53% in 2013, paid the MVC. The average accumulated amount is more than the 9.2 to 9.5% in 2013. In 2014 the MVC averaged:
10.0% for Manager
10.0% for Executives
11.1% for Non Executives.
3.10 Entry-Level Salaries
Vocational skill qualifications saw increases in entry level salaries compared to last year as follows:
ISC (ITE Skills Certificate) $100 or 7.1%
Nitec $100 or 7.1%
Higher Nitec $ 50 or 3.2%
Diploma (Engineering) $100 or 5.3% and
Degree (Others) $100 or 3.8%.
3.11 Investing to Improve Productivity
In our survey last year practically all companies agreed that employee attitude and organisational culture affect productivity. However, just over one third actually invest in improving work culture; more companies invest in task-oriented measures like work processes and training. This is unfortunate as having the right culture can not be over-stated as it has an important impact on all other productivity-related factors.
We find companies continuing to invest in:
3.12 Job-Fit/Skills vs Degree
3.12.1 On the question of Skills vs Degree Qualification, most companies (96%) responded that job-fit/skills are emphasised over and above degree qualification.
3.12.2 The measures that Companies have already taken to enhance job-fit/skills are:
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