HCS/RDS 2017 Survey on Business Prospects/Wage Increase/Bonus & CFE Strategies.
RDS surveyed 75 companies in April 2017 to find out about their business prospects, wage, bonus and recruitment plans.
Companies were also asked for their views on the Strategies recommended by the Committee on the Future Economy (CFE).
2.0 Summary of Key Findings
2.1 Companies are slightly more optimistic than last year but, as in previous years, still cautious on wage increases, bonuses and recruitment.
2.2 2017’s basic wage is expected to average at 2.9 to 3.1% slightly lower than the 3.2% in 2016;
- for 2018, it is expected to be around 3.2 to 3.3%.
2.3 Variable bonus (excluding AWS) is expected to average 1.5 to 1.7 months;
- for 2018, it is also likely to be maintained at 1.5 to 1.7 months
2.4 The total wage increase for 2017 is expected to be 2.7% and with the Consumer Price Index projected at 0.7%; the real wage increase will be around 1.9%;
2.5 On recruitment, fewer companies hired staff this year (65%) compared to last year (75%), and the numbers hired or to be hired are also lower;
- for 2018, not only are there less companies hiring (51%) but the number to be hired are also expected to be slightly lower.
2.6 Fewer companies retrenched or planned to retrench, 9% in 2017 compared to the 12% in 2016.
2.7 Less companies experienced staff turnover (81% compared to last year’s 87%) and the turnover rate is also expected to be lower this year;
- for 2018, less companies (53%) are expected to experience staff turnover but the turnover rate is expected to remain the same.
2.8 Entry-level salaries are generally mixed to slightly higher, two were slightly down, four remained unchanged and six entry-level salaries increased by about 2 to 5%.
2.9 Of the seven CFE Strategies, the most relevant to the companies are:
Strengthen enterprise capabilities to innovate and scale up - 60%
Acquire and utilise deep skills - 53%
Partner one another to enable growth and innovation - 41%
2.10 The other strategies that should also be considered are:
Adapt/discard out of date HR policies with evidence-based ones - 55%
Use behavioural science findings to review policies/ regulations - 29%
Use “Nudge” strategies to promote optimal/sustaining behaviours - 28%
3.0 Key Findings
3.1 Business Prospects
Current: Slightly more companies (75%) reported satisfactory or better business prospects compared to last year (72%);
- the most satisfied sectors are Education, General Manufacturing, and Healthcare & Related.
Slightly less companies (25%) reported unsatisfactory business prospects compared to 28% last year (28%);
- the least satisfied sector is Trading.
Asia Pacific companies are the most satisfied (100% satisfied or better) followed by US companies (83%), Japan (76%), and European companies (75%), local companies are the least satisfied (68%).
Large and medium-sized companies fare better than the small companies (79% satisfied or better compared to 65% of small companies).
Next 6 months: 16% of companies expect prospects to improve, 75% expect no change while 9% expect prospects to worsen.
- Education and Marine/Shipping are the most optimistic sector,
- Logistics sector is the least optimistic.
US companies are most optimistic over the next 6 months, while Asia Pacific companies are the least optimistic.
Large and medium-sized companies are still relatively optimistic, compared with the small companies.
3.2 Basic Wage Increase
The wage increase in 2017 averaged 2.9 to 3.1% lower than the 3.2% in 2016.
Highest Paying Sector : General Manufacturing (3.8 to 4.3%)
Lowest Paying Sector : Trading (1.8 to 2.0%).
This year, 1% of the companies cut or expect to cut wages, similar to last year; more companies, however, froze or expect to freeze wages, 23% compared to 13% in 2016.
For next year 2018, the wage increase will average 3.3% with 9% of the companies planning to freeze wages and 1% planning to cut wages.
This year, large companies paid or will pay wage increases of 2.9 to 3.2%, medium-sized companies 3.0 to 3.4% and small companies 2.7 to 2.8%. For 2018, wage increases are expected to be slightly higher.
For 2018, the sector expecting the highest wage increase is Education (4.0%) with Trading continuing to be the lowest paying sector at 1.8 to 2.0%.
Overall, Japan companies paid or will pay the highest increases of 3.9 to 4.0%; and US companies the lowest wage at 2.1 to 2.4%. For 2018, Japan companies continue to expect the highest increases of 3.8 to 3.9%.
3.3 Variable Bonus (excluding AWS)
For 2017, 87% of companies will pay variable bonuses averaging:
1.7 months for Managers
1.6 months for Executives
1.5 months for Non-executives.
Highest Paying Sector – Chemical & Related (2.6 to 2.9 months)
Lowest Paying Sector – Marine & Shipping (0.4 to 0.9 months)
Large companies will pay higher bonuses (2.1 to 2.5 months) than the 0.9 to 1.7 months of the small and medium companies.
For next year 2018, 80% of companies expect to pay some form of variable bonus and the bonuses are expected to be:
1.7 months for managers
1.6 months for executives and
1.5 months for non-executives.
The highest bonus paying sector next year will continue to be Chemical & Related sector which expect 2.4 to 2.6 months while the lowest paying sector, will be Marine/Shipping sector at 0.5 to 0.8 months.
In 2017, 91% of companies paid an average of 1 month of AWS while for next year 88% of companies expect to pay the AWS also averaging 1 month.
In 2017, a total of 65% of the companies hired or will hire staff, fewer than the 75% in 2016.
For next year 2018, 51% of the companies plan to hire staff.
The average number recruited or to be recruited per company in 2017 and the number to be recruited next year are:
This year, 35% of the companies froze or expect to freeze recruitment, compared to the 45% in 2016. For next year, 28% of the companies expect to freeze recruitment.
9% of the companies retrenched or plan to retrench this year, compared to the 12% in 2016.
For next year, none of the companies, so far, plan to retrench.
3.7 Staff Turnover
This year, so far, 81% of companies experienced staff turnover.
The annual turnover rate for 2017 expected to average:
2% for Managers
4% for Executives and
6% for Non-Executives.
For next year fewer companies (53%) are likely to experience staff turnover but the turnover rate is expected to remain the same.
3.8 Total Accumulated Monthly Variable Component (MVC) in % of Monthly Salary
Slightly fewer companies, 56% compared to 60% in 2016, paid or will pay the MVC. The average accumulated amount is slightly more than the 8.1 to 8.3% in 2016. In 2017 the MVC will average:
9.8% for Manager
9.6% for Executives
9.4% for Non Executives.
3.9 Entry-Level Salaries
Entry-level salaries for GCE ‘N’ and GCE ‘O’ decreased slightly by $20 to $40.
Those for PSC(Secretary), ISC(ITE Skills Certificate), Higher Nitec, Diploma(Engineering), Degree(Others) and MBA increased by 2% to about 5%.
GCE ‘A’, Nitec, Diploma(Other), and Degree(Engineering), however, remain unchanged.
3.10 Relevance of Strategies Recommended by Committee on Future Economy (CFE)
The Strategies that are relevant to companies depend, obviously, on individual company circumstances and existing strategies. The key ones and the proportion of companies that they apply to are:
3.11 Other Strategies That Should Also be Considered
For many companies besides broad strategies, existing HR policies & practices also need to be scrutinised and improved as indicated below:
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