SHRI/RDS Survey 2009 on Financial Crisis Pay and HR Actions.

1.0              Introduction

SHRI in conjunction with RDS surveyed 208 companies in January 2009 to find out about their wage increase, bonus and recruitment plans as well as their cost-management measures in the face of the current global financial crisis.


2.0              Summary of Key Findings

2.1       Practically all companies have been impacted by the current global crisis. However, many are hopeful of being able to weather
the financial storm. It is also heartening that companies are cutting costs to save jobs and not cutting jobs to save costs.

2.2       66% of companies (compared to 91% six months ago) are still satisfied with current business prospects but only 4% (compared to 22%) are optimistic over the next six months.

2.3       38% of companies will freeze wages but only 3% have cut or plan to cut wages. Basic wage increases this year will average 1.5% significantly lower than 2008s 4.7%.

2.4       Variable bonuses (excluding AWS) this year will average 1.5 to 1.7 months, lower than last years 2.0 to 2.4 months. This will result in a total wage decrease of 2% for 2009 a significant drop from last years increase of 6.8%.

2.5       On recruitment, only 40% of companies will be hiring this year (compared to 63% last year).

2.6       So far less than 18% of companies experienced staff turnover (compared to 85% last year) and the turnover per company is also lower than last years.

2.7       7% of companies (compared to 10% last year) retrenched or plan to retrench staff this year.

2.8       The difficulties being experienced are severe sales drop, cash flow/bad debt, funding and business uncertainties.

2.9        To cope companies are resorting to measures such as aggressively cutting non-labour    costs (54%), staff retraining (27%), cutting benefits (24%) and government assistance (23%).

2.10      Furthermore, 85% are hoping for cuts in utilities costs, corporate tax (67%), rental (62%), GST (38%) and CPF (11%).


3.0       Key Findings

3.1       Business Prospects

Current: 66% of companies reported satisfactory or better prospects
   (much lower than September 2008s 91%)
             -  The most satisfied sector was Government & Related;
             -  The least satisfied sector was Electronics Manufacturing.


Next 6 months: Only 4% expect prospects to improve, 50% expect no change and 46% expect prospects to worsen
                     -  The most optimistic sector is Healthcare/Pharmaceuticals;
                     -  The least optimistic sector is Consumer Products/Retail.


Out of a total of 18 sectors, all reported unsatisfactory business conditions except for the Government & Related.
Local companies did well (73% satisfied with current prospects).

Japanese and Asia Pacific companies are the most pessimistic over the next six months as more than 50% of them expect conditions to worsen.

In terms of Company size, large companies fared better than the rest (75% satisfied or better) compared to 66% of medium-sized and 57% of small companies.

The medium-sized companies are the most pessimistic over the next six months (51% expect conditions to worsen).



3.2     Basic Wage Increase

Overall, wages will increase by 1.5% this year, a very dramatic drop from the 4.4% to 4.8% of last year.

Many more companies are freezing wages this year (38% compared to 5% last year) but only 3% have cut or plan to cut wages.

59% of companies increased wages this year, a very significant drop from the 96% of last year.

Highest Paying Sector   : Chemicals & Related (2.7% to 2.9%)
          Lowest Paying Sector   : Electronics Manufacturing (0.4%).

          US companies will pay the highest increases (2.1% to 2.2%) while Local companies will pay the lowest (1.2%).

          In terms of size, small companies will pay the highest increases (1.6% to 1.7%)

The basic wage increases for 2009 will be 1.5% for managers, 1.5% for executives and 1.5% for non-executives.

38% of companies plan to freeze wages in 2008 and 3% of the companies plan to cut wages while a handful of companies plan to have MVC cut.


3.3    Variable Bonus (excluding AWS)

For 2008, the variables bonuses averaged:

2.4 months for Managers
2.1 months for Executives
2.0 months for Non-executives

Highest Paying Sector   - Government & Related (3.1 to 4.0 months)
Lowest Paying Sector   - Electronics Manufacturing (1.1 to 1.4 months)

Large companies paid the highest (2.3 to 2.7 months) while small companies paid the lowest
(1.7 to 2.0 months).

Asia Pacific companies paid the highest (2.3 to 2.6 months) while US companies paid the lowest
(1.7 to 2.1 month).

For this year, bonuses are expected to be significantly lower:

1.7 months for Managers
1.6 months for Executives 
1.5 months for Non-executives

Highest Paying Sector   - Government & Related (2.1 to 2.9 months)
Lowest Paying Sector   - Electronic Components Trading (0.5 to 1.0 months)

Large companies will pay the highest (1.8 to 2.1 months) while
Small companies expected to pay the lowest (1.2 to 1.4 months).

Local companies expect to pay the highest (1.6 to 1.9 months) while
US companies expect to pay the lowest (1.2 to 1.5 months).



3.4     AWS

Most companies (75%) paid an AWS averaging 1 month of basic salary.


3.5     Recruitment 

A total of 63% of the companies hired staff last year while 40% of companies hired or planned to hire this year.

The numbers recruited per company last year and for this year are:
















3.6     Retrenchment 

10% of the companies retrenched staff last year. For this year, only 7% have retrenched or plan to retrench.

The average number of people per company retrenched last year and the number to be retrenched this year are: 

















3.7     Staff Turnover

Most companies (85%) in 2008 experienced staff turnover. Across all sectors, the average staff turnover for 2008 was:

8% for Managers
10% for Executives and
11% for Non-executives.

For this year, the turnover is expected to decrease somewhat to

 7% for Managers
 8% for Executives and
10% for Non-executives.



3.8     Regular Staff Training Hours

About 50% of companies provided regular staff training to their staff last year while 33% of companies plan to this year.

The average number of training hours per employee last year and this year are:

















3.9     Entry-Level Salaries

Entry-level salaries for GCE O and A levels, PSC (Secretary),Nitec, Diploma and Degree (Engineering) remain unchanged. For GCE N and MBA, they increased by 1% to 3.5% while Higher Nitec and Degree (Others) decreased by about 2%..




3.10   Difficulties Experienced

60% of companies are experiencing severe sales drop.
23% reported conditions worse than during the SARS epidemic.
17% are experiencing cashflow/bad debt and 13% funding difficulties with
7% having
to face business uncertainties.



3.11        Coping Recovery Actions

The various actions and the proportion of companies taking them are:

Aggressively cutting non-labour costs  54%
Staff re-training  27%
Cutting benefits 24%
Applying for Government assistance 23%
Aggressively investing to increase sales 17%
Business as usual 16%
Cutting overhead expenses  15%
Staff to take unpaid leave 15%
Shortened work-week/hours 13%
Staff retrenchment 12%



3.12          Cuts Needed

            The cuts hoped and the proportion of companies hoping for them are:

Utilities 85%
Corporate tax 67%
Rental 62%
GST 38%
CPF 11%



3.13          Longer Term Solutions

            The longer term solutions being planned are:

Investing in new markets/products 61%
Enhancing work culture/collaboration 58%
Enhancing employee motivation 55%
Aggressively talent-hunting 24%





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