SHRI/RDS 2013 Survey on Business Prospects/Wage Increase/Bonus & Views on Population/Productivity Concerns.
RDS surveyed 147 companies in June 2013 to find out about their business prospects, wage, bonus and recruitment plans.
Companies were also asked for their views on the tightening of foreign labour policies use of the wage credit scheme, solution to the low fertility problem and overcoming productivity barriers.
2.0 Summary of Key Findings
Companies generally still optimistic despite lingering worries.
2.1 Most companies are cautiously optimistic. This is reflected in moderate wage increases, bonuses and recruitment plans that are broadly similar to those of the second half of last year.
2.2 This year’s basic wage increase will average 4.1% slightly higher than last year’s 4.0%. For next year 2014, it is expected to be slightly lower at 4%.
2.3 This year’s variable bonus (excluding AWS) will average 1.7 to 2.0 months. For 2014, they are expected to be 1.8 to 2.0 months
2.4 Total wage increase for this year is expected to be 4.2%, and with the Consumer Price Index expected to be 2 to 3%; there will be 1.2 to 2.2% increase in real wages.
For next year, the total wage increase is expected to be 4.1%, and with inflation expected to be around 3.1%, real wages are expected to increase by 1.0%
2.5 On recruitment, 75% of companies hired or planned to hire staff this year, slightly lower than the 78% last year.
2.6 Compared to last year, fewer companies retrenched or planned to retrench this year.
For next year, many companies are not able to make any projection on retrenchment although 1% of companies, so far, expect to retrench.
2.7 This year, staff turnover is reported at 5 to 7%, very similar to the 5 to 8% last year. For next year, staff turnover is expected to be 4 to 7%.
2.8 Entry level salaries for GCE ‘O’, GCE ‘A’, PSC (Secretary), Nitec and MBA qualifications increased by 0.9% to 7.1% compared to last year; while those for GCE ‘N’, Higher Nitec, Diploma and Degree remained unchanged.
2.9 On the issues of tightening foreign worker policies, the Wage Credit Scheme (WCS), reduced fertility and productivity barriers, almost all of the companies surveyed weighed in with their views.
These views are very interesting and wide-ranging – they range from insightful to the somewhat expected and surprising.
2.9.1 On the impact of tightened foreign worker policies, most companies (57%) think it will result in higher wages for lower-skilled workers – what is surprising is that only 19% think this will dampen economic growth.
2.9.2 On the use of the WSC, one-third of companies will increase wage increment while most of the rest will use it to increase either welfare benefit or bonus.
2.9.3 To solve the reduced fertility problem, many companies feel that living and child-upbringing costs need to be reduced together with more flexi-work – what is surprising is that only 18% think more leisure time for younger workers is needed.
2.9.4 On overcoming productivity barriers, not surprisingly, streamlining of work processes and use of appropriate technology top the list. Somewhat surprisingly, the emphasis of group rather than individual productivity and the promotion of collaborative work-culture are also highly called for. More effective top management incentives ranks very lowly with only 15% citing their importance.
3.0 Key Findings
3.1 Business Prospects
Current: 85% of companies reported satisfactory or better business prospects compared to 78% in September last year.
- the most satisfied sector is Engineering & Related.
Less companies reported unsatisfactory business prospects 15% compared to 21% in September last year.
- the least satisfied sector is Consumer Products/Retail
Overall, most companies are optimistic.
Compared to last year, more companies are satisfied except for the US companies (78% of US companies reported satisfied, compared to 88% last year).
Large companies are faring better than the rest (94% satisfied or better compared to 82% of small and medium-sized companies).
Next 6 months: 16% of companies expect prospects to improve, 76% expect no change while 8% expect prospects to worsen.
- Engineering & Related is the most optimistic sector,
- Logistics sector is the most pessimistic.
Japanese companies are most optimistic over next 6 months, (were the least optimistic last year) while European & local companies are the least optimistic.
In terms of size, large companies are
the most optimistic.
3.2 Basic Wage Increase
The wage increase this year (2013) will average 4.1%, slightly higher than the 4.0% projected in September 2012.
Highest Paying Sector : General Manufacturing (4.4 to 5.5%)
Lowest Paying Sector : IT/HiTech (3.5% to 3.6%).
This year, 7% of the companies have frozen or plan to freeze wages, and none has cut or plan to cut wages.
For 2014, the wage increase is projected to be slightly lower at 4.0%.
For 2014, the sector projecting the highest wage increase of 4.4% to 5.4% is General Manufacturing. And for the lowest wage increase, it is the 2.6 to 3.6% of the Electronics sector.
3.3 Variable Bonus (excluding AWS)
For 2013, the variables bonuses are expected to average at:
2.0 months for Managers
1.8 months for Executives
1.7 months for Non-executives.
Highest Paying Sector - Engineering & related (2.8 months; higher than the 1.7 to 2.2 months, reported in Sep 2012)
Lowest Paying Sector - Electronic sector at 0.6 to 0.7 month.
Large companies will pay somewhat higher bonuses (2.0 to 2.5 months) than the 1.5 to 2.0 months of the small and medium-sized companies.
More companies expect to pay bonuses this year, 92% compared to the 89% last year.
For next year 2014, 79% of companies expect to pay some form of bonus and the bonuses are expected to increase slightly to:
2.0 months for managers
1.9 months for executives and
1.8 months for non-executives.
The highest bonus paying sector next year will still be Engineering and related which expect to pay an average of 2.7 months while the lowest paying sector, will continue to be Electronics sector at 0.6 to 0.7 month.
In 2013, 86% of companies will pay an average of one month while for next year only 80% of companies expect to do so.
A total of 75% of the companies hired or will hire staff this year, slightly lower, compared to the 78% of last year.
For next year 2014, less companies (52%) plan to hire staff. The numbers to be hired for non-managerial staff are somewhat higher.
The average number recruited per company in 2013 and the number to be recruited next year are:
18% of companies this year are freezing recruitment and for next year, 14% expect to freeze recruitment.
This year 8% of companies retrenched or plan to retrench, fewer than the 12% last year
- surprisingly, it is the Chemicals & related sector which has the highest rate of retrenchment with about 40% of companies retrenching or expecting to retrench this year.
For next year, only 1% of the companies, so far, plan to retrench.
3.7 Staff Turnover
86% of companies experienced staff turnover in 2013, slightly higher than the 84% last year.
The annual turnover rate for this year will average:
5% for Managers
6%for Executives and
7% for Non-Executives.
For next year, 51% of companies are likely to experience staff turnover with the turnover rate expected to be slightly lower.
3.8 Total Accumulated Monthly Variable Component (MVC) in %
Fewer companies, 48% of companies currently pay the MVC and the average accumulated amount is more than last year,
9.0% for Manager (8.5% in year 2012)
8.6% for Executives
8.5% for Non Executives.
3.9 Entry-Level Salaries
Entry-level salaries for GCE “O”, GCE “A”, PSC (Secretarial), Nitec and MBA qualifications increased by 0.9% to 7.1% compared to September 2012.
Those for GCE “N”, Higher Nitec, Diploma and Degree remained unchanged.
3.10 Impact of Tightened Foreign Worker Policies
Not surprisingly, 57% of companies feel the main impact would be higher wages for lower-skilled workers – for labour-intensive sectors like construction, services, consumer products/retail, the proportions are much higher (60% to 100%) .
However, only 30% feel that this would lead to restructuring of lower-skilled work and 24% feel that it would result in increased employment of home-makers/elderly.
19% of companies expect that economic growth will be dampened while 18% expect increased outsourcing of lower-skilled work – for both these two impacts, the proportion of Construction companies is 60%.
3.11 Use of Wage Credit Scheme (WCS)
Surprisingly, only one-third of companies will use it to increase the wage increment while another 21% will spend it on welfare benefit and 17% on bonus.
3.12 Solution to Low Fertility Rate
More pro-active government efforts to lower living costs (65%), reduction of child-upbringing costs (65%), more government funds for child-upbringing & related needs (64%) and more flexi-work (56%) top the list of solutions.
Surprisingly, more leisure time for younger workers is last on the list as only 18% feel this would be a solution.
3.13 Overcoming Productivity Barriers
Not surprisingly, streamlining of work processes (79%), use of appropriate technology (63%) top the list of things to do to overcoming productivity barriers.
What is surprising is the relative high ratings of group rather than individual productivity and promotion of collaborative work culture at 55% and 54% respectively with improving of employee work-life balance rated by 52% of companies.
Next are increases in:
soft-skills/collaborative training (48%),
respect/recognition/career advancement for workers (45%),
worker participation in decision-making/innovation (44%) &
adoption of HR best practices (42%).
Surprisingly, not many companies cite the need for:
increase in capital investment (18%)
reduction of wage disparity (16%)
more effective top management incentives (15%) and
increase of foreign labour/talent (7%).
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