SHRI/RDS Survey on 2007 Wage Increase, Bonus, Recruitment Plans & HR Challenges
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 2006ís 3.6%. Next yearís 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 yearís 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 yearís; 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 2006ís 93%)
- most satisfied sector was Construction & Related;
- least satisfied sector was
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:
* 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).
Most companies (86%) paid an AWS averaging 1 month of basic salary.
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:
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%
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
Aging/older workers 6
Corporate Culture/ Management 6
Performance management 4
Work life balance 4
Leadership Development 3
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