Employees in the financial services sector in Singapore enjoyed the best basic wage growth in the country in 2012, according to the latest annual report on wages by the Ministry of Manpower (MOM), but the year-on-year increase of 5.1% was sharply down from the year before, when salaries rose 7.4%. MOM says that the subdued wages story in many sectors in 2012 reflected the weaker economic conditions that prevailed during the year.
MOM’s highly anticipated report said that the growth of basic remuneration – coming in at 4.5% for all sectors in 2012 (4.4% in 2011) – revealed a marginal increase in nominal terms, but after taking inflation into account, many Singaporeans took home less money in 2012 compared to 2011.
Some sectors managed to beat annual inflation of 4.6%, but most reported salary growth increases that were not much higher than inflation, effectively leaving take home pay neutral or only marginally ahead. The community, social and personal services sector was the next best performer after financial services, with an increase in basic salary growth of 5%.
Financial and insurance services, which typically had a high annual variable component in wages such as bonuses, continued to give the largest average payout of 3.12 months in 2012, even though it was slightly down on the previous year.
Wage growth is being affected by Singaporean companies gradually moving towards more flexible remuneration structures that allow them to respond in a more nimble manner to the vagaries of the economy.
The Ministry of Manpower noted that the general upwards trend of companies implementing the 2004 recommendations to adopt flexible wage structures continued in 2012, with 87% of employees in the private sector working for companies that had introduced at least one of the three solutions suggested by the tripartite alliance of employers, workers and government. These three recommendations include implementing variable bonuses linked to key performance indicators; introducing the monthly variable component to allow companies to change wages monthly to reflect economic conditions, and to narrow the minimum-to-maximum salary ratio for staff to an average of 1.5 or below. In 2011, the number of companies that had introduced wage flexibility was 86%, while in 2004, it was 74%.