HCS/RDS 2016/2017 Survey on Business Prospects/Wage Increase/Bonus & Manpower-Lean Issues.
HCS and RDS surveyed 89 companies in July 2016 to find out about their business prospects, wage, bonus and recruitment plans.
Companies were also asked for their views on manpower-lean issues.
2.0 Summary of Key Findings
2.1 Not surprisingly, companies are slightly less optimistic than last year but not very much so, and, as expected, they are still somewhat careful on wage increases, bonuses and recruitment.
2.2 This year’s basic wage increase averaged 3.2% slightly lower than the 3.5% to 4.0 % last year;
- for 2017, it is expected to be slightly higher at 3.4%.
2.3 This year’s variable bonuses (excluding AWS) will average 1.5 to 1.8 months;
- for next year, they are also likely to be marginally lower at 1.4 to 1.6 months
2.4 The total wage increase for 2016 is 3.6%, and with the Consumer Price Index at minus 0.4%; the real wage increase is 4.0%;
- for next year, the total wage increase is expected to be 2.2%, and with CPI expected to be around 1.0%, real wages are expected to increase by 1.2%.
2.5 This year, a total of 75% of companies hired staff, slightly less than the 78% in 2015;
- for next year, although less (58%) companies plan to hire staff the average number of executives and non-executives to be hired are slightly higher than this year’s
2.6 More companies retrenched this year, 12% of the companies compared to 8% in 2015
- for next year, none of the companies, plan to retrench.
2.7 This year, 87% of companies experienced staff turnover; although this is slightly more than the 86% last year, the average turnover rates are slightly lower than last year’s.
- for next year fewer companies (57%) are likely to experience staff turnover and the turnover rates are also expected to be slightly lower
2.8 Entry-level salaries were quite mixed; those for MBA decreased by $200 while those for GCE, NITEC, Dip(Eng) and Degree(Eng) went up by $80 to $100 and the rest were either unchanged or went up slightly.
2.9 On the issue of manpower-lean policies, 51% of companies are already implementing them with 28% still considering and 16% not sure.
- as for the essential steps to take for implementation, most cite:
continuous review of processes and technology and opening up of communications and making processes more transparent
- sure enough, there are many anxieties and problems involved ranging from perception gaps to job security fears, distrust and lack of knowhow; interestingly, “HR-not-up-to-task” was not cited.
3.0 Key Findings
3.1 Business Prospects
Current: 72% of companies reported satisfactory or better business prospects compared to 76% last year
- the most satisfied sectors are F&B/Hotels and Construction & Related
More companies reported unsatisfactory business prospects 28% compared to 24% last year.
- the least satisfied sector is still Consumer Products/Retail, similar to last year.
European companies were the most satisfied (90% satisfied or better) followed by Japanese (85%), US companies (70%) and Local companies (66%)，Asia Pacific companies were the least satisfied (55%).
Large companies fared better than the rest (83% satisfied or better compared to 65% of small and 71% of medium-sized companies).
Next 6 months: 12% of companies expect prospects to improve, 67% expect no change while 20% expect prospects to worsen
- F&B/Hotels and IT/HiTech are the most optimistic,
- Electronics & Related sector is the least optimistic.
Asia Pacific companies are most optimistic over next 6 months, while Japan companies are the least optimistic.
In terms of size, large and small companies are relatively more optimistic, compared with the medium-sized companies
3.2 Basic Wage Increase
More companies granted wage increases 97% compared to 91% last year; the wage increases, however are slightly lower at 3.2% compared to the 3.5 to 4.0% in 2015.
Highest Paying Sector : Engineering & Related (3.6 to 4.5%)
Lowest Paying Sector : Logistics (1.9 to 2.3%).
In 2016, 1% of the companies cut wages; more companies froze wages, 13% of companies compared to 9% in 2015.
For next year, the wage increase will average 3.4% with 4% of companies planning to freeze wages; and 1% of companies planning to cut wages.
For 2017, the sector expecting the highest wage increase is Engineering & Related (3.9% to 4.1%). And Financial & Related sector expects to have the lowest wage increase, 2.5 to 3.2%.
In terms of both company size and nationality, wage increases are relatively similar and do not vary very significantly.
3.3 Variable Bonus (excluding AWS)
For 2016, 85% of companies (92% in 2015) paid variable bonuses which are marginally lower than last year’s, averaging:
1.8 months for Managers
1.7 months for Executives
1.5 months for Non-executives.
Highest Paying Sector – General Manufacturing (2.2 to 3.2 months)
Lowest Paying Sector – Logistics (0.6 months)
Large companies paid higher bonuses (1.9 to 2.4 months) than the 1.2 to 1.8 months of the small and medium-sized companies.
For next year 2017, 82% of companies expect to pay some form of bonus and the bonuses are expected to be slightly lower averaging:
1.6 months for managers
1.6 months for executives and
1.4 months for non-executives.
The highest bonus paying sector next year will continue to be General Manufacturing sector which expect to pay bonuses at 2.0 to 2.9 months while the lowest paying sector, will continue to be Logistics sector at 0.3 months.
In 2016, 91% of companies will pay 0.9 to 1 month of AWS while for next year 90% of companies expect to pay the AWS of 1 month.
3.5 Total/Real Wage Increase
Total wage increase is total wage (annual base plus AWS and variable bonus) of current year divided by that of the previous year.
With 91% of companies paying AWS, total wage increase for 2016 is 3.6% and with the Consumer Price Index at minus 0.4% (as at June 2016), the real wage increase is 4.0%
For next year, as 90% of companies expecting to pay AWS, total wage increase for 2017 is expected to be 2.2%. The real wages are expected to be increase by 1.2%, after factoring in the CPI projection of 1.0%
In 2016, a total of 75% of companies hired staff, slightly less than the 78% in 2015.
For next year, 58% of companies plan to hire staff.
The average number recruited per company in 2016 and the number to be recruited next year are:
More companies froze or plan to freeze recruitment 45% this year (compared to 27% in 2015); for next year, 34% of the companies expect to freeze recruitment.
More companies retrenched this year, 12% of companies compared to 8% in 2015.
For next year, none of the companies, so far, plan to retrench.
3.8 Staff Turnover
This year, 87% of companies experienced staff turnover; although this is slightly more than the 86% last year, the average turnovers rates are slightly lower than last year’s.
The annual turnover rate for 2016 will average:
4% for Managers
8% for Executives and
7% for Non-Executives.
For next year fewer companies (57%) 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 more companies, 60% compared to 56% in 2015, paid the MVC. The average accumulated amount is less than the 10.0 to 10.5% in 2015. In 2016 the MVC averaged:
8.1% for Manager
8.1% for Executives
8.3% for Non Executives.
3.10 Entry-Level Salaries
Entry-level salaries for PSC(Secretary) and Higher Nitec decreased by $25 to $30; while those for MBA decreased by $200.
GCE ‘N’, GCE ‘O’, Nitec, Diploma(Engineering) and Degree(Eng) saw increases of $80 to $100; Degree(Others) went up by $25 while those for GCE ‘A’, ISC(ITE Skills Certificate) were unchanged.
3.11 Manpower-Lean Policies
3.11.1 51% of companies are already implementing manpower-lean policies with 28% still considering and 16% not sure.
3.11.2 Understandably, companies and their employees have anxieties or are having problems with the issue:
almost half (48%) cite perception gaps among employees and management
and another 48% cite job security fears
17% cite distrust between employees and management
15% say they lack implementation knowhow
14% cite possible internal divisiveness
14% cite management inertia
12% cite potential for downsizing abuse.
Interestingly, no Company mentioned that HR is not up to the task.
3.11.3 The steps that are considered essential for successful implementation and the proportion of companies citing them are:
If you wish to participate in any of our future surveys, click here