Drop due to firms cutting bonuses, but basic wages likely to be on uptrend
By Fiona Chan
TOTAL pay packages are likely to take a hit this year as the rapidly worsening economic crisis exerts a heavier toll on Singaporeans.
A new survey by the Singapore Human Resources Institute (SHRI) has found that employers plan to give out less in bonuses this year, with the lowest payments coming from small firms and United States-based companies.
This will result in overall pay packages decreasing 2 per cent on average, a sharp drop from the 6.8 per cent average increase last year, SHRI said.
Variable bonuses will average 1.5 to 1.7 months of basic pay, lower than last year's 2 to 2.4 months. This does not include the annual wage supplement, commonly known as the 13th month payment.
Government ministries are likely to give out the highest bonuses this year, ranging from 2.1 to 2.9 months, SHRI found in the survey conducted this month.
The lowest bonuses - just half to one month's pay - will come from the electronic components trading sector.
But the good news is that only 3 per cent of firms have cut or plan to cut wages, according to the survey, while 38 per cent will freeze wages.
This means that basic wages on the whole will still be on an uptrend this year, although the projected average rise - 1.5 per cent - will be significantly lower than last year's increase of 4.7 per cent.
'It is heartening that companies are cutting costs to save jobs and not cutting jobs to save costs,' said SHRI, which polled 208 companies on their wage, bonus and recruitment plans.
The survey, done in conjunction with RDS Remuneration Data Specialists, found that while virtually all companies have been affected by the worldwide downturn, many 'are hopeful of being able to weather the financial storm'.
Just 7 per cent have retrenched or plan to retrench staff this year - less than the 10 per cent last year. However, only four in 10 companies will be hiring this year, compared with more than six in 10 last year.
The main difficulties facing companies are a severe drop in sales, problems with cash flow, bad debts, funding and business uncertainties, SHRI said.
To keep their heads above water, more than half the businesses polled are aggressively cutting non-labour costs. Other popular measures include retraining staff, cutting benefits and relying on Government assistance.
SHRI's generally sobering survey results illustrate the rapidly deteriorating outlook over the global economy.
In the past two months alone, trade figures and growth projections around the world have collapsed, prompting the Ministry of Trade and Industry to lower its forecast for economic performance this year twice in the period.
This may explain why SHRI's study contrasts with that of human resource consultancy Mercer, which polled 233 Singapore companies last November. It found that a third of them would go ahead with planned wage increases, which would average 4.2 per cent.
That poll was greeted with scepticism by the public as well as analysts and unionists. NTUC secretary-general Lim Swee Say called the projection 'highly unrealistic', while Singapore National Employers Federation president Stephen Lee said the figure 'seems to be too high'.
In response, Mercer's managing director of Asean, Ms Su-Yen Wong, said at the time that companies will take different approaches to the downturn.
She acknowledged that overall pay is likely to decrease, especially for senior staff, while salary increases are expected to moderate further.
'The expected reductions in bonus levels may well result in a decrease in overall pay this year and possibly in 2010, particularly for senior staff who typically have more compensation at risk,' she added.
'Some companies expect to review salaries several months from now and are taking a wait-and-see approach at this time.'
fiochan@sph.com.sg
Monday, February 2
Total pay to fall by 2% on average: Poll
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