1.0            Introduction 

SHRI in conjunction with RDS surveyed 210 companies in June 2007 to find out about their wage increase, bonus and recruitment plans as well as their talent management imperatives and HR challenges.

2.0            Summary of Key Findings

2.1     With continuing economic growth, it is the best of times for most businesses but for HR practitioners, it is an increasingly challenging one indeed. Staff turnover and wage pressures are fast rising and with business confidence continuing to mount, the situation is likely to get worse before it gets better.

2.2     More companies (95% of companies compared to 93% six months ago) are satisfied with current business prospects and almost all (98%) are optimistic over the next six months.

2.3     Wage increases this year will average 4.1% and are higher than 2006’s 3.6%. Next year’s increases are expected to go up to 4.2%.

2.4     Variable bonuses (excluding AWS) this year will average 2.0 months, higher than last year’s 1.9 months; for next year, they are expected to increase to 2.1 months.

2.5     On recruitment, somewhat less companies will be hiring this year (81% compared to 88% last year) but the number hired per company was higher than last year’s; for next year, less companies (53%) will be hiring but the numbers to be hired will be higher.

2.6     Almost all companies (96%) experienced staff turnover. Across all sectors, the average annualised staff turnover was 10% for managers, 18% for executives and 21% for non-executives.

2.7     Entry-level salaries increased practically across the board by 2% to 8%.

2.8     Practically all companies are engaged in talent management and the single most prevalent imperative is Recruiting for Attitude/Values (77% of companies), followed by Talent Management Strategy, Manage Exit of Misfit Employees, Special Incentives/treatment for Critical Talent and Providing Opportunities for Life-long Learning (all at 40%).

2.9     The HR challenge that is faced by most companies (74%) is Staff Turnover and Retention followed by Staff Attraction/Recruitment (46%), Competitive Wages (28%), Tight Labour Market (17%), Managing Business Growth (16%) and Cost Pressures (13%).

3.0     Key Findings 

3.1     Business Prospects

         Current:       95% of companies reported satisfactory or better prospects (higher than December 2006’s 93%)

                             - most satisfied sector was Construction & Related;

                             - least satisfied sector was Healthcare/Pharmaceuticals.

Next 6 months:       98% were optimistic (38% expected further improvements, 60% expected no change)

-  most optimistic sectors was Construction & Related;

-  least optimistic sector was Electronics Manufacturing.

Out of a total of 21 sectors, only 2 reported* unsatisfactory business conditions; the 2 sectors are:

Electronics Manufacturing          

Healthcare/Pharmaceuticals

* 20% or more of the companies in these 2 sectors

US companies did very well (98% satisfied or better) while European companies were the most optimistic (59% expected further improvement) over the next six months.

In terms of size, medium companies fared very well (97% satisfied or better) compared to 96% of large companies and 93% of small companies. Small companies, however, were the most optimistic (51% expected further improvements) over the next six months.

3.2       Basic Wage Increase 

Overall, wages will increase this year by 4.1%, higher than the 3.6% of last year.

Despite the higher wage increase, more companies froze or expect to freeze wages this year (9% compared to 3% last year).

91% of companies increased wages this year, lower than the 97% last year. 

Highest Paying Sector   : Services (4.0% to 5.6%)

                   Lowest Paying Sector   : Logistics and Food & Beverage/Hotels (3.4% to 3.6%)

          Asia Pacific companies paid the highest increases (4.6% to 5.2%) while Japanese companies, the lowest (3.7% to 4.1%)

The basic wage increases projected for 2008 are 4.3% for managers and 4.2% for executives and 4.1% for non-executives.

                  Highest Paying Sector   : Marine/Shipping (4.6% to 5.9%)

                  Lowest Paying Sector   : General Manufacturing (3.2% to 3.3%)

          Asia Pacific companies will pay the highest increase (5.0% to 5.6%) and Local companies, the lowest (3.8% to 4.0%).

7% of companies plan to freeze wages in 2008 and one company plan to cut wages.

3.3       Variable Bonus (excluding AWS)

For 2007, the variables bonuses averaged:

                    2.2 months for Managers

                    2.0 months for Executives

                    1.9 months for Non-executives

           Highest Paying Sector   - General Manufacturing (2.4 to 3.0 months)

           Lowest Paying Sector   - Consumer Products/Retail (1.3 to 1.6 month)

           Medium Companies paid the highest (2.1 to 2.3 months) while small and large companies paid the lowest (1.8 to 2.1 months).

           Japanese companies paid the highest (2.2 to 2.3 months) while Asia Pacific companies paid the lowest (1.6 to 1.8 month).

           For next year, bonuses are expected to be:

                      2.1 months for Managers

                      2.1 months for Executives        

                      1.9 months for Non-executives

           Highest Paying Sector   - Transportation (2.3 to 3.0 months)

           Lowest Paying Sector   - Consumer Products/Retail (1.2 to 1.6 months)

           Small companies will pay the highest (1.9 to 2.3 months) while

           Large companies expected to pay the lowest (1.8 to 2.1 months).

           US companies expected to pay the highest (2.0 to 2.5 months) while

           Europe companies expected to pay the lowest (1.6 to 1.8 months).

3.4       AWS

Most companies (86%) paid an AWS averaging 1 month of basic salary.

3.5       Recruitment

A total of 81% of the companies hired staff this year (compared to 88% last year). Next year, there be much fewer companies hiring (53%) but the number of people to be hired will be higher.

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

3.6       Retrenchment

9% of companies retrenched staff this year (same as last year); this is expected to drop to 1% in 2008

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

3.7       Staff Turnover

Almost all companies (96%) experienced staff turnover. Across all sectors, the average annualised staff turnover up to June 2007 was:

           10% for Managers

           18% for Executives and

           21% for Non-executives. 

3.8       Entry-Level Salaries

Entry-level salaries for school-leavers remain unchanged. Those for PSC (Secretary), Nitec, Higher Nitec, Diploma, Degree holders and MBA increased by 2% to 8%.

3.9       Talent Management Imperatives

All but one company are engaged in talent management and the single most prevalent imperative is Recruiting for Attitude/Values (77% of companies).

This was followed by:                                      

           Talent Management Strategy                                                 40%

           Manage Exit of Misfit Employees                                           40%

           Special Incentives/treatment for Critical Talent                     40%

           Providing Opportunities for Life-long Learning                       40%

Others include:

           Building Commitment                                                          36%

           Improving Work-Life Balance                                               36%

           Improving Company Branding                                               34%

           Special Programs for Engaging Employees                             33%

           Special Staff Retention Programs                                         29%

           Attracting & Retaining Mature/Older Workers                        25%

           Integrating/Assimilating Foreign Talent                                 20%

           Reducing Work Stress                                                         17%

           Using Multi-Source Performance Assessment                          16%

           Special Programs for Building Trust                                      12%

3.10     HR Challenges

 The key HR challenges faced by most companies are:

                                                                                                % of Companies

Staff turnover/retention/resignation                                                         74

Staff attraction/recruitment                                                                     46

Competitive wages/salaries                                                                     28

Tight labour market and shortages of skilled staff                                       17

Business growth/profitability/branding                                                      16

Cost pressures                                                                                         13

HR related matters                                                                                    9

Career development/succession planning                                                     9

Training & Development                                                                             9

Talent management                                                                                    8

Staff commitment/motivation/morale                                                         8

Others                                                                                                      8

Aging/older workers                                                                                  6

Corporate Culture/ Management                                                                 6

Benefits/incentives                                                                                   5

Performance management                                                                          4

Work life balance                                                                                      4

Leadership Development                                                                           3

Re-design Job                                                                                           1

Job Evaluation                                                                                          1