Report on Wage Practices,

2012


























Manpower Research and Statistics Department
Singapore


June 2013




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commercial use, provided the source is acknowledged. Request
for extensive reproduction should be made to:

Director
Manpower Research and Statistics Department
Ministry of Manpower
18 Havelock Road
Singapore 059764

Fax: 6317 1804
Email: mom_rsd@mom.gov.sg












Manpower Research and Statistics Department



MISSION


To provide timely and reliable
national statistical information on the labour market
to facilitate informed decision-making within the government and community-at-large










Statistical activities conducted by the Manpower Research and Statistics Department
are governed by the provisions of the Statistics Act (Chapter 317). The Act
guarantees the confidentiality of information collected from individuals and
companies. It spells out the legislative authority and responsibility of the Director,
Manpower Research and Statistics Department. The Statistics Act is available in the
Singapore Department of Statistics website at www.singstat.gov.sg.



CONTENTS



Page

NOTATIONS AND ABBREVIATIONS i

HIGHLIGHTS ............................................................................................................................. ii

1 Introduction ...................................................................................................................... 1

2 Background ..................................................................................................................... 1

Part I Annual Wage Changes

3 Overview ......................................................................................................................... 3

4 Total And Basic Wage Changes ..................................................................................... 6

5 Annual Variable Component ........................................................................................ 12

6 Built-in Wage Increase for Employees Earning
Basic Monthly Salary of Up To $1,000 ....................................................................... 17

Part II Wage Flexibility

7 Overview ....................................................................................................................... 20

8 Adoption of Key Wage Recommendations ................................................................... 20

9 Implementation of Flexible Wage Components............................................................ 25

10 Information Sharing ....................................................................................................... 36

11 Conclusion ..................................................................................................................... 39

Statistical Appendix : Statistical Charts and Tables

Annex: Survey Coverage and Methodology

NOTE

This Report on Wage Practices covering wage flexibility and annual wage changes replaces the Report
on Wages previously released at end June. Data on occupational wages previously published in the
Report on Wages will continue to be available online at http://www.mom.gov.sg/mrsd/publication

i

Notations

- : nil or negligible
s : suppressed


Abbreviations

AWS : Annual Wage Supplement
CPF : Central Provident Fund
CPI : Consumer Price Index
DOS : Department of Statistics
GDP : Gross Domestic Product
MOM : Ministry of Manpower
MTI : Ministry of Trade and Industry
MVC : Monthly Variable Component
NRAF : Non Rank-and-File
NWC : National Wages Council
RAF : Rank-and-File
ULC Unit Labour Cost
Cat A : Establishment was profitable and did much better than in the previous year
Cat B : Establishment was profitable and did as well as in the previous year
Cat C : Establishment was profitable but did not do as well as in the previous year
Cat D : Establishment incurred a loss



ii

HIGHLIGHTS


Annual Wage Changes


Amid the tight labour market, total wages (including employer CPF contributions) in the private
sector rose by 4.2% in 2012. This was lower than the growth of 6.1% in 2011, reflecting the weaker
economic conditions in 2012. After adjusting for inflation using the Consumer Price Index (CPI) for
all items, real total wages (including employer CPF contributions) declined by 0.4% in 2012, after
rising by 0.9% in 2011. When adjusted using CPI less imputed rentals on owner-occupied
accommodation (OOA), which relates more directly to the actual cash expenditures of households,
real total wages (including employer CPF contributions) rose by 0.5%, after increasing by 1.9% in
2011.

Over the long term, real wage increases have been supported by productivity growth. Labour
productivity grew on average by 1.6% per annum, exceeding the growth in real total wages
(including employer CPF contributions) of 1.2% per annum over the decade from 2002 to 2012 . In
the immediate post-SARS years, labour productivity grew strongly on the back of robust GDP
growth. However, in the last 5 years, labour productivity shrank by 0.4% per annum as economic
growth was driven primarily by employment.


Wage Flexibility


A large majority of employees in the private sector were under some form of flexible wage
system, following a general uptrend in the implementation of flexible wage measures
recommended by the tripartite partners representing employers, workers and the government in
2004. In December 2012, 87% of private sector employees were working in establishments
which had at least one of the flexible wage components recommended by the tripartite partners.
This was comparable to the 86% in the year before and notably higher than the 76% in June
2004.

Having a narrow maximum-minimum salary ratio was the most common wage recommendation
adopted, with nearly two in three (65%) private sector employees working in establishments with
this flexible wage component. This was followed by linking variable bonus to Key Performance
Indicators (KPI) (49%) and having the Monthly Variable Component (MVC) (34%) in the wage
structure.

1

Report on Wage Practices, 2012




1 Introduction

1.1 This report examines employers adoption of a flexible wage system and changes in their
employees wages in 2012. The findings are based on data from the Survey on Annual Wage
Changes carried out from December 2012 to March 2013 which effectively covered 4,694 private
establishments each with at least 10 employees. This yielded a survey response rate of 90%. The
survey coverage and methodology are explained in Annex 1.

2 Background

Economic growth slowed, though employment creation remained high

2.1 Singapores real gross domestic product (GDP) grew by 1.3% in 2012, moderating from
the 5.2% growth in 2011 (Chart 1). Inflation as measured by the change in consumer price index (CPI)
for all items was 4.6% in 2012, easing from the 5.2% in 2011. Excluding imputed rentals on owner-
occupied accommodation (OOA), which do not involve actual cash expenditures, inflation was 3.6% in
2012, lower than the 4.2% in 2011.

2.2 Total employment increased by 129,100 or 4.0% in 2012, slightly above the growth of
122,600 or 3.9% in 2011. With high employment creation, the overall unemployment rate remained at
a low of 2.0% in 2012, while the unemployment rate for residents dipped to 2.8% from 2.9% in 2011.


2

Chart 1: Key Economic Indicators, 2000-2012

(A) Change in GDP, CPI and Employment



(B) Unemployment Rate (Annual Average)























Sources : CPI, GDP - Department of Statistics, MTI
Employment, Unemployment- Manpower Research and Statistics Dept, MOM

-10
-5
0
5
10
15
GDP 9.0 - 1.2 4.2 4.6 9.2 7.4 8.6 9.0 1.7 - 0.8 14.8 5.2 1.3
CPI (CPI excl. Imputed rentals
on owner- occupied
accommodation)
1.3 1.0 - 0.4 0.5 1.7 0.5 1.0 2.1 6.6 0.6 2.8 5.2 4.6
Employment 5.3 0.0 - 1.1 - 0.6 3.3 5.1 7.6 9.4 8.1 1.3 3.9 3.9 4.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Per Cent
(1.7) (1.0) (-0.3) (0.7) (2.0) (0.6) (1.1) (2.2) (5.5) (-0.4) (3.3) (4.2) (3.6)

0
1
2
3
4
5
6
Overall 2.7 2.7 3.6 4.0 3.4 3.1 2.7 2.1 2.2 3.0 2.2 2.0 2.0
Resident 3.7 3.7 4.8 5.2 4.4 4.1 3.6 3.0 3.2 4.3 3.1 2.9 2.8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Per Cent

3

PART I ANNUAL WAGE CHANGES

3 Overview

Growth in wages slowed, amid weaker economic conditions

3.1 Amid the tight labour market, total wages (including employer CPF contributions) in the
private sector rose by 4.2% in 2012. This was lower than the growth of 6.1% in 2011, reflecting the
weaker economic conditions in 2012 (Chart 2).

3.2 Excluding employer CPF contributions, total wages (comprising basic wages and
bonuses) of private sector employees rose by 3.8% in 2012, after increasing by 5.3% in 2011.
1
The
total wage rise in 2012 stemmed from a 4.5% increase in basic wages, which more than offset the
decline in bonuses (also known as annual variable component) from 2.32 months of basic wages in
2011 to 2.19 months in 2012.

Chart 2: Change In Total And Basic Wages, 2000-2012












1
The data collected from the Survey on Annual Wage Changes refer to the change in wages paid to full-time resident employees in
continuous employment of at least one year. This is the only source that provides breakdown of total wage changes into changes in basic
wages and bonuses, and for three caregories of employees namely the rank-and-file, junior management and senior management.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Total Wages (incl employer CPF
contributions)
8.1 5.2 0.0 0.8 1.6 4.3 4.5 6.6 4.9 -0.4 5.7 6.1 4.2
Total Wages 6.6 1.1 0.0 1.5 3.6 4.3 4.5 5.9 4.2 -0.4 5.5 5.3 3.8
Basic Wages 4.9 2.9 1.8 1.2 2.7 3.1 3.6 4.3 4.4 1.3 3.9 4.4 4.5
-1
0
1
2
3
4
5
6
7
8
9
Per Cent

4

Wage gains weighed down by inflation

3.3 After adjusting for inflation, real total wages (including employer CPF contributions)
declined by 0.4% in 2012, after rising by 0.9% in 2011. The adjustment for inflation was made using
the CPI for all items. When adjusted using CPI less imputed rentals on OOA, which relates more
directly to the actual cash expenditures of households, real total wages (including employer CPF
contributions) rose by 0.5%, after increasing by 1.9% in 2011.

3.4 Excluding employer CPF contributions, real total wages declined by 0.8%, while real
basic wages dipped by 0.1% in 2012. When adjusted for inflation using CPI less imputed rentals on
OOA, the real total and basic wage changes were positive at 0.2% and 0.9% respectively (Chart 3).

Chart 3: Change In Real Total And Basic Wages, 2000-2012

Notes: (1) Real wage changes were deflated by Consumer Price Index (CPI) for all items. Figures in brackets refer to real wages
deflated by CPI less imputed rentals on owner-occupied accommodation.
(2) Basic wages exclude employer CPF contributions.

-5
0
5
10
Real Total Wages (incl
employer CPF contributions)
6.8 4.2 0.4 0.3 -0.1 3.8 3.5 4.5 -1.7 -1.0 2.9 0.9 -0.4
Real Total Wages 5.3 0.1 0.4 1.0 1.9 3.8 3.5 3.8 -2.4 -1.0 2.7 0.1 -0.8
Real Basic Wages 3.6 1.9 2.2 0.7 1.0 2.6 2.6 2.2 -2.2 0.7 1.1 -0.8 -0.1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Per Cent
(3.2) (1.9) (2.1) (0.5) (0.7) (2.5) (2.5) (2.1) (-1.1) (1.7) (0.6) (0.2) (0.9)
(4.9) (0.1) (0.3) (0.8) (1.6) (3.7) (3.4) (3.7) (-1.3) (0.0) (2.2) (1.1) (0.2)
(6.4) (4.1) (0.3) (0.1) (-0.4) (3.7) (3.4) (4.4) (-0.6) (0.0) (2.4) (1.9) (0.5)

5

Over the long term, real wage increases have been supported by productivity growth

3.5 Amid slower GDP growth and continued high employment creation, labour productivity
contracted by 2.6% in 2012, after rising by 1.3% in 2011 and 11% in 2010, reflecting the volatility in
year-to-year change in labour productivity (Chart 4). Over the decade from 2002 to 2012, labour
productivity grew on average by 1.6% per annum, exceeding the growth in real total wages (including
employer CPF contributions) of 1.2% per annum (Table 1). In the immediate post-SARS years, labour
productivity grew strongly on the back of robust GDP growth. However, in the last five years, labour
productivity shrank by 0.4% per annum as economic growth was driven primarily by employment
2
.

Chart 4: Change In Labour Productivity And Real Wages, 2000-2012

Source : Department of Statistics, MTI (For Productivity Data)

Note: Figures in brackets refer to real wages deflated by CPI less imputed rentals on owner-occupied accommodation.


Table 1: Annualised Change In Labour Productivity And
Real Total Wages, 2002 to 2012
% p.a.
Period
Annualised from 2002-2012
(10 years)
Labour Productivity 1.6 %
Real Total Wages
(incl. employer CPF contributions)
1.2 %
(1.5 %)

Note: Figures in brackets refer to real wages deflated by CPI less imputed rentals on owner-occupied accommodation.


2
On average, real GDP grew by 4.3% per annum while employment grew by 4.7% per annum over the five years from 2007 to 2012.
-10
-5
0
5
10
15
Labour Productivity 4.8 -4.5 5.7 5.9 7.4 2.9 1.9 0.3 -7.3 -3.4 11.1 1.3 -2.6
Real Total Wages (incl employer CPF
contributions)
6.8 4.2 0.4 0.3 -0.1 3.8 3.5 4.5 -1.7 -1.0 2.9 0.9 -0.4
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Per Cent
(6.4) (4.1) (0.3) (0.1) (-0.4) (3.7) (3.4) (4.4) (-0.6) (0.0) (2.4) (1.9) (0.5)

6

4 Total and Basic Wage Changes

Wage Changes by Type of Employees

Wage gap between RAF and non-RAF employees narrowed

4.1 Total wages rose for all three categories of employees in 2012, though lower than the
increases in 2011. Junior (JM) and senior management (SM) employees had higher total wage gains
(JM: 4.2%; SM: 3.8%) than rank-and-file (RAF) employees (3.7%). While the total wage gain for RAF
continued to lag non-RAF, the gap narrowed to 0.4%-point in 2012 from 1.2%-point in 2011.

4.2 Rank-and-file (RAF) employees saw higher basic wage gains in 2012 (4.3%) than in 2011
(4.0%), following the National Wages Council (NWC) recommendation to give a built-in wage increase
of at least $50 to low-wage employees earning basic monthly salary of up to $1,000. In contrast, junior
and senior management employees experienced lower basic wage increases (JM: 4.9%; SM: 4.0%)
than in 2011 (JM: 5.1%; SM: 4.3%). (Chart 5). This was the first time that basic wage growth
increased over the year for RAF while it slowed for junior and senior management, since comparable
data were first collected in 1998.

Chart 5: Total And Basic Wage Change, 2011 and 2012

Note : Non-rank-and-file comprise junior and senior management



7

Distribution of Establishments by Wage Change

Two in three establishments raised total wages, but the quantum of increase was smaller

4.3 Despite the more subdued economic conditions, the proportion of private establishments
that raised total wages of their employees was unchanged at 68% in 2012. However, the average
quantum of wage increase in these establishments at 5.8% was lower than 6.6% in 2011. The
proportion of establishments that cut wages in 2012 (9.0%) was broadly comparable to 2011 (8.5%),
with the quantum of wage cut at 4.4% and 4.3% respectively. The proportion that froze total wages
was 24%, broadly unchanged from a year ago (23%) (Chart 6).

Chart 6: Distribution Of Establishments By Wage Change And Extent Of Wage Change


(B) Basic Wage Change
Notes: (1) s: Data suppressed due to small number covered.
(2) Figures may not sum up to 100% due to rounding.
Extent of Basic Wage Change of
Establishments Which Cut or Increased Basic
Wages, 2000 - 2012
Wage Cut No Change Wage Increase
8.5%9.0%
23.4%
68.1% 67.5%
23.5%
2012
2011
Distribution of Establishments by Total Wage
Change, 2011 and 2012

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Firms WhichCut Total Wages -2.9 -5.4 -7.0 -5.0 -4.6 -4.5 -3.4 -3.1 -5.5 -6.2 -4.3 -4.3 -4.4
Firms WhichIncreased Total Wages 8.3 5.4 4.8 5.2 5.9 5.9 5.8 7.5 6.6 4.8 7.6 6.6 5.8
-12.0
-8.0
-4.0
0.0
4.0
8.0
12.0
Per Cent
Extent of Total Wage Change of
Establishments Which Cut or Increased Total
Wages, 2000 - 2012
Wage Cut No Change Wage Increase
30.3%
0.7% 0.8%
68.9%
69.2%
30.1%
2012
2011
Distribution of Establishments by Basic Wage
Change, 2011 and 2012

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Firms Which Cut Basic Wages -5.8 -6.6 -6.0 -5.2 -5.6 -6.2 -5.2 -3.5 -4.9 -4.8 -5.6
Firms Which Increased Basic Wages 5.8 4.7 3.8 3.1 3.7 4.0 4.3 5.0 5.3 3.8 4.7 5.0 5.2
-12.0
-8.0
-4.0
0.0
4.0
8.0
12.0
Per Cent
s

s
(A) Total Wage Change

8

Distribution of Establishments by Profit Status

Majority of establishments were profitable

4.4 Although economic conditions weakened in 2012, slightly over eight in ten (82%) private
establishments were profitable, unchanged from a year ago (Chart 7). This proportion remained
higher than during the recessionary years in 2009 (79%) and 2001 (65%). Generally, the proportion of
loss-making firms has been trending downward over the last decade.

Chart 7: Proportion Of Profitable And Loss-Making Establishments, 2000-2012



4.5 The distribution of establishments by profit status was fairly similar in the last two years. In
2012, about half (49%) of private establishments either outperformed (Category A) or were as
profitable as in the preceding year (Category B), comparable to 2011 (50%). Establishments that
were profitable but did not do as well as in the previous year (Category C) rose marginally from 32%
to 33%. The share of loss-making establishments (Category D) was unchanged at 18% (Chart 8).

0
10
20
30
40
50
60
70
80
90
100
Per Cent
Profitable Firms 73.5 64.9 66.3 70.7 75.4 80.6 81.4 84.9 81.0 79.4 85.1 82.4 82.3
Loss-making Firms 26.5 35.1 33.7 29.3 24.6 19.4 18.6 15.1 19.0 20.6 14.9 17.6 17.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

9

Chart 8: Distribution Of Establishments By Profit Status, 2011 And 2012
Per Cent
Notes: (1) Based on private sector establishments that disclosed their profitability status in 2011 and 2012.
(2) Figures may not sum up to 100% due to rounding.


Wage Change by Profit Status

Wage changes were correlated with profitability

4.6 Wage changes were correlated with profitability of firms, more so for total than basic wage
changes, reflecting the closer link between bonuses and business profitability. The more profitable
Category A establishments gave the largest total wage increase of 5.3%, followed by Category B
establishments 4.4%, Category C at 2.9% and Category D at 2.6%. In terms of basic wage increases,
the range was not as wide from 4.8% for Category A to 3.5% for Category D establishments
(Chart 9).

Chart 9: Total And Basic Wage Change By Profit Status For All Employees, 2011 And 2012
16.6
33.8
32.0
17.6
16.8
32.6
32.9
17.7
0 20 40 60 80 100
Cat A: Fi rm was profitable and did much better than in the
previous year
Cat B: Firm was profitable and did as well as in the previous
year
Cat C: Firm was profitable but did not do as well as in the
previous year
Cat D: Firm incurred a loss
2011 2012
Cat A Cat B Cat C Cat D
Basic Wage Change
3.1%
4.1%
4.8% 4.7%
3.5%
4.4%
4.6%
4.8%
Cat A Cat B Cat C Cat D
Total Wage Change
3.4%
4.7%
5.6%
6.3%
2.6%
2.9%
4.4%
5.3%
2012
2011

10


4.7 The majority of establishments raised wages, led by Category A (83%) and followed by
Category B (69%), Category C (65%) and Category D (55%) establishments. Less than half (46%) of
loss-making Category D establishments either froze or cut wages (Chart 10).

Chart 10: Distribution Of Establishments By Total Wage Change And Profit Status, 2012
Per Cent












Note: Figures may not sum up to 100% due to rounding.







Wage Change by Industry

All industries gave wage increases

4.8 All industries gave wage increases to their employees in 2012, though the increases were
more restrained than in 2011 (Appendix Table 1). Establishments paying above-average basic and
total wage increases were from financial & insurance (5.1%, 4.4%), community, social & personal
(5.0%, 3.9%), administrative & support (4.8%, 4.7%), information & communication (4.6%, 4.7%), real
estate (4.6%, 4.4%) and professional (4.7%, 3.8%) services (Chart 11).

4.9 On the other hand, construction (3.6%, 3.7%), manufacturing (4.3%, 3.7%) and
accommodation & food services (3.4%, 3.4%) gave below-average basic and total wages. The latter
was weighed down by food & beverage (F&B) services (3.1%, 3.2%) as accommodation services
gave higher wage increases (4.4%, 4.4%).

Category A : Firm was profitable and did much better than in the previous year
Category B : Firm was profitable and did as well as in the previous year
Category C : Firm was profitable but did not do as well as in the previous year
Category D : Firm incurred a loss

5.0
12.2
82.7
6.7
23.9
69.4
10.7
24.6
64.7
13.8
31.7
54.5
Cat A
Cat B
Cat C
Cat D
Wage Cut No Change Wage Increase

11

Chart 11: Total And Basic Wage Change By Industry, 2012




Total Wage Increase (%)
Basic Wage Increase (%)
Quadrant 1
Above-Average
Total Wage Increase;

Below-Average
Basic Wage Increase
Quadrant 2
Above-Average
Total And Basic
Wage Increases
Quadrant 4
Below-Average
Total And Basic
Wage Increases
Quadrant 3
Below-Average
Total Wage Increase;

Above-Average
Basic Wage Increase

12

5 Annual Variable Component

Bonuses declined in 2012, amid the slower economic growth

5.1 Amid slower economic growth, the private sector paid out an annual variable component
(comprising the annual wage supplement and variable bonus) averaging 2.19 months of basic wages
in 2012, down 5.6% from the 2.32 months in 2011. Consequently, the annual variable component
formed a smaller share of total wages at 15.4% in 2012, than 16.2% in 2011 (Chart 12).

Chart 12: Annual Variable Component, 2000-2012



5.2 All three categories of employees received lower bonuses in 2012. The bonus payout
was higher for senior (2.56 months or 17.6% of total wages) and junior management (2.50 months or
17.2%) than RAF (1.90 months or 13.7% of total wages) (Chart 13). Typically, the variable
component would be higher for management staff as a greater share of their pay package is flexible
and tied to performance.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Proportion (All) 15.9 14.5 12.9 12.8 13.5 14.7 15.4 16.4 16.1 14.2 15.3 16.2 15.4
Quantum (All) 2.27 2.03 1.77 1.76 1.87 2.06 2.18 2.36 2.31 1.99 2.17 2.32 2.19
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
Proportion of Total
Wage (%)
Months of Basic
Wage

13

Chart 13: Annual Variable Component As A Proportion Of Total Annual Wages, 2011 And 2012



Annual Variable
Component in Months of
Basic Wages
2011 2012
2.32
(+6.9%)
2.19
(-5.6%)
2.06
(+7.3%)
1.90
(-7.8%)
2.63
(+5.6%)
2.52
(-4.2%)
2.62
(+4.8%)
2.50
(-4.6%)
2.67
(+8.1%)
2.56
(-4.1%)




5.3 The proportion of private establishments that gave more than one month of annual
variable component was similar to the preceding year at 44% though proportionately fewer
establishments paid out more than two months of bonuses (Chart 14). The share of establishments
which did not pay any annual variable component or paid less than one month declined from 36% in
2011 to 34% in 2012. One in five (20%) of establishments did not pay bonuses. These
establishments gave their employees an average basic wage increase of 3.3% in 2012, higher than
the 2.5% in 2011. A large majority (85%) of them were small establishments with less than 50
employees. Nearly all (98%) of these small establishments that did not pay variable component to
their employees did not have variable bonus and/or Annual Wage Supplement as part of their wage
structure.











Notes: (1) Figures in brackets refer to percentage change in annual variable component over the year.
(2) Non-rank-and-file employees comprise junior and senior management employees.
18.2%
17.9%
18.0%
14.7%
16.2%
17.6%
17.2%
17.4%
13.7%
15.4%
Senior
Management
Junior
Management
Non-Rank-and-
File
Rank-and-File
All
2011 2012

14


Chart 14: Distribution Of Establishments By Quantum Of Annual Variable Component Paid,
2011 And 2012
Per Cent
Note : Figures may not sum up to 100% due to rounding.


Annual Variable Component by Profit Status

Bonus payout linked to profitability

5.4 The profitable Category A (2.34 months of basic wages) and Category B (2.38 months)
gave out about the same quantum of bonus in 2012. Category C (2.15 months) establishments paid
out a lower quantum of bonus while the loss-making Category D establishments gave the least (1.36
months) (Chart 15).










21.0
8.0
6.7
19.9
21.3
13.1
10.0
20.2
7.5
6.5
21.9
22.9
12.1
8.8
0 10 20 30 40
None
> 0 to 0.5 months
> 0.5 to < 1 month
1 month
> 1 to 2 months
>2 to 3 months
> 3 months
Q
u
a
n
t
u
m

P
a
i
d
2011 2012

15



Chart 15: Annual Variable Component By Profit Status, 2011 And 2012

Note : Based on private sector establishments that disclosed their profitability status in 2011 and 2012.


Annual Variable Component by Industry

Most industries gave lower bonuses

5.5 Nearly all industries paid lower annual variable component than in 2011 (Table 2).
Financial & insurance services which typically has a high annual variable component in its wages,
continued to give the largest payout of 3.12 months in 2012, though this was 6.9% lower than the 3.35
months in 2011. In contrast, administrative & support services continued to pay the lowest annual
variable component averaging less than one month (0.97 month), down 7.6% from 2011 (1.05
months). Only accomodation & food services paid out more bonuses (1.31 months) than in 2011 (1.20
months). Employees in accommodation services (2012: 2.71 months, 2011: 2.65 months) had
notably higher bonuses than in F&B services (2012: 1.00 month, 2011: 0.84 month).

Months of Basic Wage
2.41
2.44
2.40
1.20
2.34
2.38
2.15
1.36
0.00 1.00 2.00 3.00 4.00
Cat A: Firm was profitable and did much better than in
the previous year
Cat B: Firm was profitable and did as well as in the
previous year
Cat C: Firm was profitable but did not do as well as in
the previous year
Cat D: Firm incurred a loss
2011 2012

16

Table 2: Annual Variable Component By industry, 2011 And 2012
Months of Basic Wages
Industry (SSIC 2010) Period
Months of Basic Wages
Total RAF NRAF
ALL INDUSTRIES
2012
2.19 1.90 2.52
2011 2.32 2.06 2.63
Manufacturing
2012
2.54 2.38 2.72
2011 2.62 2.44 2.82
Construction
2012
1.42 1.10 1.85
2011 1.59 1.36 1.82
Services
2012
2.17 1.85 2.52
2011 2.31 2.01 2.65
Wholesale & Retail Trade
2012
2.15 1.82 2.57
2011 2.19 1.91 2.54
Transportation & Storage
2012
2.35 2.34 2.39
2011 2.88 2.88 2.90
Accommodation & Food Services
2012
1.31 1.22 1.47
2011 1.20 1.08 1.42
Information & Communications
2012
2.32 2.42 2.28
2011 2.39 2.40 2.38
Financial & Insurance Services
2012
3.12 2.94 3.17
2011 3.35 3.28 3.37
Real Estate Services
2012
1.90 1.43 2.99
2011 2.08 1.47 3.37
Professional Services
2012
2.09 1.80 2.25
2011 2.29 2.07 2.41
Administrative & Support
Services
2012
0.97 0.86 1.41
2011 1.05 0.92 1.61
Community, Social & Personal
Services
2012
2.36 2.23 2.52
2011 2.46 2.30 2.67


17

6 Built-in Wage Increase For Employees Earning Basic Monthly Salary Of Up To
$1,000

6.1 While noting the ongoing efforts by the government, union and employer groups to help
low wage workers raise their employabilty and incomes
3
, the NWC in its 2012/13 guidelines
recommends that establishments grant employees earning a basic monthly salary of up to $1,000, a
built-in wage increase of at least $50. For companies that are doing well, the NWC recommends that
they give these workers a larger increase.

Almost six in ten establishments gave wage increases to their employees earning basic
monthly salary of up to $1,000, including nearly three in ten which gave at least $50 built-in
wage increase

6.2 As of December 2012, almost six in ten private establishments with employees earning a
monthly basic salary of up to $1,000 gave wage increases to these employees. This comprised nearly
half (48%) of private establishments that had given (40%) or decided to give
4
(8.1%) a built-in wage
increase, and those that provided other forms of wage increases (11%) comprising one-off special
payment, additional bonus and/or additional allowance. Specifically, about three in ten (28%) gave at
least $50 built-in wage increases (Chart 16).

Chart 16: Distribution Of Establishments By Whether They Gave Built-In Wage Increase
To Employees Earning Basic Monthly Salary Of $1,000 And Below, 2012


















Notes: (1) Based on private sector establishments with employees earning basic monthly salary of $1,000 and below.
(2) Figures for reasons for not providing built-in wage increase to these employees will not sum up as respondents can give multiple
reasons.
(3) * Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.


3
The NWC notes the ongoing efforts by the Government, union and employer groups to help low-wage workers raise their employability and
incomes through various measures including the Workfare Training Support (WTS) Scheme and the Inclusive Growth Programme (IGP).
Government transfers such as the Workfare Income Supplement (WIS) have also helped to supplement the disposable income and CPF
savings of this group.
4
Have decided to give built-in wage increase but have not yet decided on the quantum.
Had given BWI to
employees
earning up to
$1,000 (40.2%)
Decided to give,
quantum
undecided (8.1%)
Did not give BWI
to employees
earning up to
$1,000
(51.6%)
Less than $50
(12.5%)
At least $50
(27.7%)
Provided other forms
of wage increase
(11.2%)
Already paying
market rate
(20.4%)
Estab not performing
well (16.6%)
Business cost
impacted (12.2%)
Wages locked in
client's contracts
(2.9%)
*

18



Profitable firms more likely to give built-in wage increase

6.3 In line with the NWC recommendation, more profitable firms gave built-in wage increases to
their employees earning up to $1,000 than less profitable or loss-making firms. 64% of Category A
establishments that were more profitable than in the preceding year gave/decided to give
4
the built-in
wage increase compared with 37% among loss-making Category D establishments (Table 3).


Table 3: Distribution Of Establishments By Whether They Gave Built-In Wage Increase
To Their Employees Earning Basic Monthly Salary Of $1,000 And Below, 2012
Per Cent
Estab
Yes No
Sub-
Total
Had
Given
Quantum
Not Yet
Decided
On
Quantum
Sub-
Total
Provided
other
forms of
wage
increase*
Already
paying
market
rate
Estab
not
perform
-ing
well
Business/
wage
costs will
be
impacted
Wages
locked-in
under
existing
contracts
signed
with
clients
Less
than
$50
$50 &
More
Total 48.4 40.2 12.5 27.7 8.1 51.6 11.2 20.4 16.6 12.2 2.9
By Profit Status
Cat A 63.6 49.0 11.0 38.0 14.6 36.4 9.1 19.1 1.7 11.1 1.9
Cat B 52.5 43.4 13.1 30.3 9.2 47.5 12.7 24.1 3.2 11.0 2.8
Cat C 44.5 39.8 14.6 25.3 4.6 55.5 13.0 20.8 17.5 12.9 3.7
Cat D 36.8 28.1 8.0 20.2 8.7 63.2 5.7 12.8 53.4 14.0 2.1
Notes : (1) Based on private sector establishments with employees earning basic monthly salary of $1,000 and below.
(2) Figures for reasons for not providing built-in wage increase to these employees will not sum up as respondents can give multiple
reasons.
(3) * Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.
(4) The residual other reasons is not reflected in the table.

19


6.4 Establishments in real estate services (70%), professional services (70%), manufacturing
(60%) and community, social & personal services (52%) were more likely to give/decided to give
4
a
built-in wage increase to their employees earning $1,000 and below (Table 4). The converse was true
for establishments in construction (40%) and transportation & storage (39%).

Table 4: Distribution Of Establishments By Whether They Gave Built-In Wage Increase
To Their Employees Earning Basic Monthly Salary Of $1,000 And Below By Industry, 2012
Per Cent
Establishment
Yes No
Sub-
Total
Had
Given
Quantum
Not Yet
Decided
On
Quantum
Sub-
Total
Provided
other
forms of
wage
increase*
Already
paying
market
rate
Estab
not
perform
-ing
well
Business/
wage
costs will
be
impacted
Wages
locked-in
under
existing
contracts
signed
with
clients
Less
than
$50
$50 &
More
Total 48.4 40.2 12.5 27.7 8.1 51.6 11.2 20.4 16.6 12.2 2.9
Manufacturing 59.9 44.5 16.2 28.3 15.4 40.1 7.0 15.4 11.2 8.0 3.0
Construction 39.5 27.8 4.6 23.2 11.7 60.5 8.3 24.2 23.1 9.7 2.8
Services 47.2 41.4 13.1 28.4 5.8 52.8 12.9 20.4 17.0 13.4 2.9
Wholesale &
Retail Trade
45.8 38.4 13.8 24.6 7.4 54.2 16.6 14.4 17.2 15.7 1.0
Transportation &
Storage
38.7 35.2 7.4 27.8 3.5 61.3 29.3 30.5 5.0 16.1 -
Accommodation
& Food Services
45.2 37.3 16.3 21.1 7.9 54.8 10.1 23.9 26.0 10.7 1.7
Information &
Communications
s s s s s s s s s s S
Financial &
Insurance
Services
s s s s s s s s s s S
Real Estate
Services
70.1 54.2 11.1 43.1 16.0 29.9 17.4 25.0 0.7 2.1 5.6
Professional
Services
70.4 60.6 16.4 44.2 9.7 29.6 6.2 10.2 17.7 2.2 2.2
Administrative &
Support Services
42.2 37.4 8.8 28.6 4.8 57.8 10.0 22.7 15.5 19.2 11.5
Community,
social & personal
services
51.8 51.8 13.5 38.3 0.1 48.2 5.8 25.7 13.4 9.9 2.7
Notes: (1) Based on private sector establishments with employees earning basic monthly salary of $1,000 and below.
(2) Figures for reasons for not providing built-in wage increase to these employees will not sum up to sub-total as respondents can give
mulitiple reasons.
(3) * Other forms of wage increase comprise one-off special payment, additional bonus and/or additional allowance.
(4) s: Data suppressed due to small number covered.
(5) The residual other reasons is not reflected in the table.

20

PART II WAGE FLEXIBILITY

7 Overview

7.1 This section of the report updates the progress of employers in restructuring their wage
system to be more flexible and performance based. Data on wage flexibility pertain to private sector
establishments each employing at least 25 workers.
5


7.2 Tripartite partners representing employers, workers and the government in January 2004
made the following recommendations for employers to implement a flexible wage system to ensure
competitiveness, as well as enhanced income and employability for workers:

(1) implement variable bonus linked to Key Performance Indicators (KPI)
6
;
(2) introduce the Monthly Variable Component (MVC) in wage structure;
(3) narrow the maximum-minimum salary ratio for the majority of their employees to average of
1.5 or less.
7


Recognising that establishments may require different forms of wage flexibility to meet their specific
circumstances, employers may choose to implement only the recommendations that are relevant to
them.

8 Adoption of Key Wage Recommendations

Large majority of employees under some form of wage flexibility in 2012

8.1 There has been a general uptrend in the implementation of wage flexibility, resulting in a
large majority of employees in the private sector being under some form of flexible wage system.
8
In
December 2012, 87% of private sector employees were working in establishments which had at least
one of the flexible wage components recommended by the tripartite partners. This was comparable
to the 86% in the year before and notably higher than the 76% in June 2004.

8.2 Both small and medium enterprises with 25 to 199 employees (SMEs) (from 63% in June
2004 to 81% in December 2012) and large establishments with at least 200 employees (from 85% to
92%) saw improvements in employees covered by at least one recommended flexible wage

5
This is to be comparable with June 2004 figures from the Inaugural Survey on Wage Restructuring.
6
In the survey, establishments are considered to have implemented variable bonus linked to KPI, if they have formulated and
communicated to their employees, the KPI for the payment of the variable bonus.
7
Establishments can decide on appropriate ratio for different jobs and industries. In the survey, establishments are considered to have
implemented this recommendation if they have narrowed the salary ratio to 1.5 or less, decided to/in the process of narrowing the salary
ratio or all along have a maximum-minimum ratio at 1.5 or less.
8
Establishments are considered to have some form of flexible wage system when they have adopted at least one key wage
recommendation.

21

components. While SMEs continued to lag large establishments in implementation, the gap has
narrowed (Chart 17).

8.3 In December 2012, 15% of private sector employees were in establishments that had a
fully flexible wage system comprising all three key wage recommendations. Including employees in
establishments with two recommendations (30%), some 45% of private sector employees had at least
two wage recommendations in their wage structure, down slightly from 46% in December 2011, but
higher than the 39% in June 2004 (Chart 17).

8.4 Transportation & storage (92%), community, social & personal services (92%) and
accommodation & food services (91%) had among the highest share of employees with some form of
wage flexibility, while construction (77%) had the least. Details are in Appendix - Table 2.


22

Chart 17: Proportion of Employees by Number of Key Wage Recommendations Implemented,
2004 2012
Per Cent




! 1 Wage
Recommendations
! 2 Wage
Recommendations
All 3 Wage
Recommendations
A
l
l

I
n
d
u
s
t
r
i
e
s

B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e


75.6
81.3
82.6
81.1
83.3 83.7 83.6
85.1
89.1
85.7
87.2
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
39.1
43.5
49.2
47.3
46.1 46.0
45.0 45.3
48.8
46.4
44.9
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
12.4
15.0
22.0 21.4 20.8
19.3
17.0 17.0
18.4
16.8
15.4
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
63.1
72.1
72.9
68.3
73.4
76.9
75.0
78.6
81.9 78.880.6
85.0
89.2 89.7
90.2 90.1
88.6
90.4
89.9
94.3
90.7
91.8
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
25-199 Empl oyees
! 200 Empl oyees
3.6
4.3
8.2
5.7 6.0 5.4 6.1 5.8 6.5
6.2
5.5
19.1
24.1
32.232.6
31.0
29.1
25.5 25.1
27.0
24.4
22.2
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
21.2
24.5
28.9
25.0
26.0
28.5
26.6
27.7
30.1
25.3 25.7
52.8
59.6
64.1
63.1
60.0
58.5 59.5
58.2
62.5 61.6
58.2
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2

23

Establishments that had not implemented any key wage recommendations were largely
satisfied with flexibility of their existing wage system

8.5 One in eight (13%) employees in the private sector were working in establishments that
did not implement any of the key wage recommendations (Table 5). The majority of them,
representing 11% of all private sector employees, were working in establishments that were satisfied
with their wage flexibility.

Table 5: Proportion of Employees in Establishments That Did Not Implement
Any Key Wage Recommendations, 2011 and 2012 (December)















Note: Figures may not sum up due to rounding







Period
Did Not
Implement Any
Key Wage
Recommendation
Satisfied/Not Satisfied
With Level of Flexibility
in Wage System
Satisfied
Not
Satisfied
All Industries
2012 12.8 10.6 2.1
2011 14.3 11.2 3.1
By Establishment Size
25-199
Employees
2012 19.4 15.3 4.1
2011 21.2 15.4 5.7
200 or More
Employees
2012 8.2 7.4 0.8
2011 9.3 8.1 1.2
Per Cent

24

8.6 Overall, nearly all (98%) private sector employees were working in establishments that
had either some form of wage flexibility (87%) or were satisfied with their wage flexibility even though
their establishments did not implement any key wage recommendations (11%) (Chart 18).

Chart 18: Proportion of Employees In Establishments With Some Form of Wage Flexibility Or Were
Satisfied With Their Wage Flexibility Even Though Their Establishments Did Not Implement Any Key
Wage Recommendations, 2004 2012 (December)



8.7 The remaining 3.9% of establishments that were not satisfied with the flexibility of their
wage system but did not implement the tripartite recommendations employed only 2.1% of the
workforce. Many of them, representing 2.6% of all establishments reported that they would not be
implementing the wage features recommended by tripartite partners. These establishments
employed only 1.5% of private sector employees and were mainly SMEs (covering 94% of
establishments in this category or 2.5% of all establishments).


93.2% 94.7% 95.5% 94.9% 95.7% 94.3% 96.7% 96.9% 97.9%
81.3% 81.1%
83.3% 83.7% 83.6% 85.1%
89.1%
85.7% 87.2%
11.8% 13.2%
11.4% 11.8% 11.3%
10.5%
7.6%
11.2%
10.6%
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007 2008 2009 2010 2011 2012
Satisfied Even Though Establishments Did Not Implement Any Key Wage Recommendations
With At Least One Key Wage Recommendation

25

Table 6: Proportion Of Employees In Establishments That Did Not Implement Any Key Wage
Recommendations And Not Satisfied With Wage Flexibility By Intention To Implement, December 2012
Per Cent

Not
Satisfied
With
Wage
Flexibility
Intention to Implement Wage
Recommendations
Yes No Not Aware
All Industries 2.1 0.1 1.5 0.5
By Establishment Size
25-199 Employees 4.1 0.2 2.8 1.1
200 or More
Employees 0.8 0.1 0.6 0.1
Note: Figures may not sum up due to rounding.



9 Implementation of Flexible Wage Components

Narrowing maximum-minimum salary ratio was the most common wage recommendation
adopted

9.1 In December 2012, nearly two in three (65%) private sector employees were in
establishments that had a narrow maximum-minimum salary ratio, up from 63% in December 2011
and 52% in June 2004. This was the most common flexible wage recommendation adopted, followed
by linking variable bonus to KPI. Nearly half (49%) of private sector employees had a wage system
that linked variable bonus to KPI, down from the year before (52%), but still higher than in June 2004
(42%). The MVC was the least common flexible wage component, with only one in three (34%)
private sector workforce having it in their wage structure, broadly unchanged since 2007.

9.2 Large establishments continued to lead in adopting the MVC and variable bonus linked to
KPI. On the other hand, SMEs fared better in narrowing the maximum-minimum salary ratio
(Chart 19).

26

Chart 19: Proportion of Employees by Key Wage Recommendations, 2004 2012
Per Cent
















Note : Figures do not sum up to 100% as establishments can implement more than one key wage recommendation.



Maximum-Minimum Salary
Ratio
MVC
Variable Bonus Linked to
KPI
A
l
l

I
n
d
u
s
t
r
i
e
s

B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e


52.2
59.3
60.8
59.6
60.2
62.4
57.8 59.0
64.4
62.5
65.1
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
32.9
33.5
39.4
36.0
37.2
34.7 33.8 34.7 34.7
34.8
33.8
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
42.0
47.1
53.6
54.2
52.8
51.9
54.1 53.7
57.2
51.7
48.6
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
26.1
29.1
33.8
31.4
31.5
34.2
36.4 35.8
37.3
29.0
27.1
54.1
62.3
68.1
70.5
67.5
64.6
68.0 66.9
71.6 68.0
63.5
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
14.1
14.2
19.3 15.4 16.5
14.2 13.9 14.2 14.0 15.3
13.6
47.3
49.8
54.1
50.6
51.5
49.3 49.4 49.7 49.8 48.8 47.7
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
47.8
57.6
56.8
52.1
57.5
62.4
57.4
62.2
67.2 66.0
71.2
55.5
60.8
63.7
64.8
62.1
62.5
58.1
56.6
62.4
59.9
60.9
J
u
n

0
4
D
e
c

0
4
J
u
n

0
5
D
e
c

0
5
D
e
c

0
6
D
e
c

0
7
D
e
c

0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
25-199 Employees ! 200 Employees

27

Maximum-Minimum Salary Ratio

Seven in ten establishments had narrowed/were narrowing their maximum-minimum wage
ratio to 1.5 or less

9.3 The proportion of establishments that had narrowed/were narrowing the wage ratio for the
same job to 1.5 or less had been generally trending upwards from 47% in June 2004 to 66% in
December 2011 and further to 70% in December 2012. In 2012, these establishments employed 65%
of private sector employees, up from 63% a year ago and 52% in June 2004 (Chart 20).

Chart 20: Proportion of Employees and Establishments That Had Narrowed or Were Narrowing the
Maximum- Minimum Salary Ratio to 1.5 or Less, 2004 - 2012

Per Cent



















9.4 On average, establishments had a maximum-minimum salary ratio of 1.50 for their rank-
and-file (RAF) workers, compared with the 1.51 in December 2011 and 1.59 in December 2004. In
2012, the ratio was higher in large (1.55) establishments than the SMEs (1.44). Among
establishments that were narrowing or had narrowed the salary range of their RAF employees, the
maximum-minimum salary ratio was expectedly lower at 1.39 in 2012 (Chart 21).
Establishment Employee
A
l
l

I
n
d
u
s
t
r
i
e
s


B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e

52.2
59.3
60.8
59.6
60.2
62.4
57.8
59.0
64.4
62.5
65.1
J
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-
0
4
D
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-
0
4
J
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-
0
5
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6
D
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7
D
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9
D
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1
0
D
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1
1
D
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1
2
47.1
56.5 56.5
53.0
58.0
61.6
57.7
62.3
67.6
66.3
70.2
J
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0
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D
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J
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6
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9
D
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D
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1
D
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2
47.8
57.6
56.8
52.1
57.5
62.4
57.4
62.2 67.2 66.0
71.2
55.5
60.8
63.7
64.8
62.1 62.5
58.1
56.6
62.4
59.9 60.9
J
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J
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D
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D
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9
D
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1
0
D
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-
1
1
D
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-
1
2
25-199 Employees ! 200 Employees
46.7
56.2
56.2
51.9
57.6
61.8
57.4
62.4
67.9
66.7
70.8
50.1
59.0
58.9
60.6
61.3 60.2 59.8
61.2
65.3
63.0
65.8
J
u
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0
4
D
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4
J
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1
1
D
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-
1
2
Employee Establishment

28

Chart 21: Average Maximum-Minimum Salary Ratio of the Rank-and-File,
2004 2012 (December)

























9.5 Junior management (1.63) continued to have a higher maximum-minimum ratio than RAF
(1.50) in 2012. Among establishments that were narrowing or had narrowed the salary range of their
junior management, the maximum-minimum salary ratio was 1.47 (Chart 22).


Had Narrowed / Were Narrowing Total
A
l
l

I
n
d
u
s
t
r
i
e
s


B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e


1.59 1.56 1.54 1.55 1.58 1.56 1.52 1.51 1.50
D
e
c
-
0
4
D
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0
5
D
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6
D
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0
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D
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0
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D
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0
9
D
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-
1
0
D
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-
1
1
D
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-
1
2
1.47 1.48 1.45 1.43 1.43 1.41 1.40 1.40 1.39
D
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0
4
D
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5
D
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6
D
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0
7
D
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8
D
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9
D
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D
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-
1
1
D
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-
1
2
1.55 1.52 1.51 1.50 1.54 1.52 1.48 1.47 1.44
1.63 1.58 1.57 1.58 1.62 1.59 1.55 1.55 1.55
D
e
c
-
0
4
D
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-
0
5
D
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6
D
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7
D
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-
0
8
D
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0
9
D
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-
1
0
D
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-
1
1
D
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c
-
1
2
25-199 Employees ! 200 Empl oyees
1.37 1.38 1.36 1.34 1.35 1.35 1.34 1.34 1.33
1.55 1.53 1.50 1.49 1.49 1.46 1.45 1.45 1.44
D
e
c
-
0
4
D
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5
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6
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7
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9
D
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-
1
0
D
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-
1
1
D
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-
1
2

29

Chart 22: Average Maximum-Minimum Salary Ratio of Junior Management,
2004 2012 (December)



Had Narrowed / Were Narrowing Total
A
l
l

I
n
d
u
s
t
r
i
e
s


B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e


1.68
1.70
1.72
1.67
1.70
1.80
1.62 1.61 1.63
D
e
c
-
0
4
D
e
c
-
0
5
D
e
c
-
0
6
D
e
c
-
0
7
D
e
c
-
0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
1.58 1.60 1.59
1.54 1.51 1.49 1.48 1.51 1.47
D
e
c
-
0
4
D
e
c
-
0
5
D
e
c
-
0
6
D
e
c
-
0
7
D
e
c
-
0
8
D
e
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-
0
9
D
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-
1
0
D
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-
1
1
D
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c
-
1
2
1.61 1.59
1.68
1.58 1.62 1.59
1.54 1.54 1.50
1.73 1.75 1.73 1.73 1.75
1.93
1.67 1.66 1.70
D
e
c
-
0
4
D
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-
0
5
D
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-
0
6
D
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-
0
7
D
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-
0
8
D
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-
0
9
D
e
c
-
1
0
D
e
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-
1
1
D
e
c
-
1
2
25-199 Employees ! 200 Employees
1.48 1.46 1.46 1.45 1.43 1.42 1.41 1.41 1.38
1.65 1.68 1.65
1.60 1.57 1.54 1.52
1.57 1.53
D
e
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-
0
4
D
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5
D
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6
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8
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9
D
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-
1
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D
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1
1
D
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-
1
2

30

Variable Bonus Linked to KPI


Large establishments more likely to link variable bonus to KPI

9.8 Close to three in ten (28%) private establishments had adopted the recommendation to
formulate and communicate to their employees KPIs for the payment of variable bonus, down from
30% in December 2011 (Chart 23). The adoption of this wage recommendation was more prevalent
in large establishments (54%) than SME (24%).

9.9 By employee count, 49% of private sector employees were in establishments that had
variable bonus linked to KPI. Industries such as financial & insurance services (77%), information &
communications (73%) and professional services (60%) had among the highest share of employees
with variable bonus linked to KPI. On the other hand, the employee coverage in construction (18%),
administrative & support services (29%) and real estate services (37%) were significantly below the
overall average (Appendix Table 3).

9.10 While not having a set of KPIs for the payment of variable bonus, another 19% of private
establishments employing 17% of employees, used indicators such as annual profit, revenue and
productivity as general reference for payment of variable bonus and communicated these to their
employees. This was up from 17% of establishments employing 14% of employees in December
2011.

31

Chart 23: Proportion of Employees and Establishments That Formulated and Communicated KPI for
Payment of the Variable Bonus, 2004 2012
Per Cent





























Note: Figures in parenthesis pertain to private sector establishments that had either formulated and communicated a set of KPIs or
used and communicated indicators such as annual profit, revenue and productivity as a general reference for payment of variable
bonus.
















Establishment
Employee
A
l
l

I
n
d
u
s
t
r
i
e
s


B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e


42.0
47.1
53.6 54.2 52.8 51.9
54.1 53.7
57.2
51.7
(65.5)
48.6
(65.9)
J
u
n
-
0
4
D
e
c
-
0
4
J
u
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-
0
5
D
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5
D
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-
0
6
D
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-
0
7
D
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-
0
8
D
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-
0
9
D
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c
-
1
0
D
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c
-
1
1
D
e
c
-
1
2
25.9
29.4
33.1 31.8
32.1
33.7
36.2
35.0
36.5
29.6
(46.6)
27.7
(46.8)
J
u
n
-
0
4
D
e
c
-
0
4
J
u
n
-
0
5
D
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c
-
0
5
D
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c
-
0
6
D
e
c
-
0
7
D
e
c
-
0
8
D
e
c
-
0
9
D
e
c
-
1
0
D
e
c
-
1
1
D
e
c
-
1
2
26.1
29.1
33.8
31.4
31.5
34.2
36.4 35.8
37.3
29.0
(46.3)
27.1
(46.3)
54.1
62.3
68.1
70.5
67.5
64.6
68.0
66.9
71.6
68.0
(79.4) 63.5
(79.4)
J
u
n
-
0
4
D
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-
0
4
J
u
n
-
0
5
D
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-
0
5
D
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-
0
6
D
e
c
-
0
7
D
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-
0
8
D
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-
0
9
D
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-
1
0
D
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-
1
1
D
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-
1
2
25-199 Employees ! 200 Employees
23.8
26.9
30.1
28.3 28.5
30.9
33.2
31.9
33.0
25.9
(43.3)
24.0
(43.4)
41.8
50.9
54.2 56.7
57.0
50.9
58.6 58.3
62.9
57.0
(70.9)
54.4
(71.0)
J
u
n
-
0
4
D
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-
0
4
J
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-
0
5
D
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5
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6
D
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7
D
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8
D
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9
D
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1
0
D
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-
1
1
D
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-
1
2

32

Monthly Variable Component

One in seven establishments covering one in three private sector employees had MVC

9.11 One in seven (14%) private establishments had implemented the MVC, covering one in
three (34%) private sector employees in December 2012, down from the corresponding 16% and 35%
the year before. However, this was substantially higher than the 4.1% of private establishments
covering only 9.6% of employees in 1999, when the recommendation was first introduced. Large
establishments (32%) were more likely to implement MVC than SMEs (11%) (Chart 24).

9.12 Community, social & personal services (58%) and financial & insurance services (56%)
continued to have the highest coverage of employees, with at least half of their workforce having MVC
in their wage structure. In contrast, construction (11%), information & communications (17%),
administrative & support services (23%) and wholesale & retail trade (24%) had the least coverage
(Appendix Table 3).


Chart 24: Proportion of Employees and Establishments With MVC, 1999 2012

Per Cent


A
l
l

I
n
d
u
s
t
r
i
e
s


B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e

Establishment Employee

9.6
17.3
22.4
24.7
27.9
32.9
33.5
39.4
36.0
37.2
34.7 33.8 34.7 34.7
34.8
33.8
D
e
c
-
9
9
D
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-
0
0
D
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-
0
1
D
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-
0
2
D
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-
0
3
J
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-
0
4
D
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4
J
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5
D
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0
5
D
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-
0
6
D
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0
7
D
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0
8
D
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-
0
9
D
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-
1
0
D
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-
1
1
D
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-
1
2
4.1
6.3 8.1 9.4
10.1
13.7
14.2
18.7
15.5
16.9
15.3
15.5 14.8 14.4
15.6
13.6
D
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9
9
D
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0
0
D
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0
1
D
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0
2
D
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3
J
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4
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4
J
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5
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5
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0
6
D
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7
D
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8
D
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0
9
D
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1
0
D
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1
1
D
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1
2
3.9
6.5
8.5 9.3
10.4
14.1 14.2
19.3 15.4
16.5
14.2 13.9 14.2 14.0 15.3 13.6
15.0
27.3
36.4
39.4
43.2
47.3
49.8
54.1
50.6
51.5
49.3
49.4 49.7 49.8
48.8 47.7
D
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9
9
D
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0
0
D
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0
1
D
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0
2
D
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3
J
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4
D
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J
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5
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6
D
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7
D
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0
8
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0
9
D
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1
0
D
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1
1
D
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-
1
2
25-199 Employees ! 200 Employees
3.4
4.9
6.4 7.4
7.9
10.9
11.2
15.6
12.5
14.0 12.3 12.7 12.1 11.6 12.9
11.0 10.4
19.4
26.2
28.2
30.2
35.8
37.0
41.6
37.2 37.9
33.7
35.9 35.1 34.7 35.2
32.1
D
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9
9
D
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0
0
D
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1
D
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2
D
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4
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9
D
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D
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1
1
D
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1
2

33

MVC As A Proportion Of Monthly Basic Wages

Close to 30% of total wages in MVC establishments were variable

9.13 Establishments with MVC on average set aside 9.9% of monthly basic wages as MVC for
majority of their employees in 2012, comparable to 10% in 2011. This was substantially higher than
the 2.6% in December 2000 when the data were first collected (Chart 25).

Chart 25: MVC as a Proportion of Monthly Basic Wages in Establishments With MVC,
2000 2012 (December)


9.14 Establishments with MVC typically paid higher-than-average annual variable component
(2.94 months of basic wages in 2012) than non-MVC establishments (1.91 months). As such, MVC
establishments had 28% of total wages that was variable (annual variable component: 20% and MVC:
8.0%)
9
compared with non-MVC establishments at 14% of total wages. Including non-MVC
establishments, the variable share of total wages amongst all private establishments was 20%,
comprising an annual variable component of 16% and MVC of 3.3% in 2012.



9
The tripartite partners recommended a target of 30% comprising 20% in annual variable component and 10% in MVC.
9.9
10.0 10.0
9.6
9.7
9.2
9.0
8.1
6.8
5.4
4.0
3.8
2.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Per Cent

34

Triggers for MVC Cuts/Restoration

9.15 The MVC was introduced to enable companies to adjust monthly wages in response to
changes in the business environment without having to wait till the end of the year to adjust the
Annual Variable Component. The ability to trigger MVC cuts and restorations through clear and
appropriate indicators/guidelines is therefore important. As of December 2012, about 63% of
employees in MVC establishments had indicators/guidelines in their wage structure for the cut and
restoration of MVC, up from 61% in December 2011, after stabilising at 59% from 2008 to 2010.


Table 7: Distribution Of Employees With MVC By With/Without Indicators/Guidelines For The Cut And
Restoration Of The MVC, 2011 And 2012 (December)
Per Cent
Period Yes No
All
2012 63.4 36.6
2011 61.2 38.8
By Establishment Size
25-199 Employees
2012 66.4 33.6
2011 62.2 37.8
200 or More
Employees
2012 62.8 37.2
2011 61.0 39.0
Note : Figures may not sum up to 100% due to rounding.


Majority of establishments did not wish to implement or were not aware of the MVC

9.16 As of December 2012, 14% of establishments had implemented MVC while another 0.6%
had decided to or were in the process of implementation and 9.0% were still considering (Table 8).
Nearly two in three (65%) establishments had no intention of implementing and a further 10% were
unaware of this flexible wage component. Nearly all these establishments with no intention or were
unaware of the MVC were SMEs (91%).



35


Table 8: Distribution of Establishments and Employees in Establishments by Intention to Implement
MVC, December 2012
Establishment Count
Per Cent
Total
With
MVC
Decided/ in the
Process of
Implementation
Still Under
Consideration
Previously
With MVC
But Was
Later
Removed
No Wish
to
Implement
Not
Aware
of
MVC
All 100.0 13.6 0.6 9.0 1.1 65.3 10.4
By Establishment Size
25-199
Employees
100.0 11.0 0.5 9.2 1.1 66.7 11.5
200 or More
Employees
100.0 32.1 0.7 7.8 0.9 55.2 3.1

Employee Count
Per Cent
Total
With
MVC
Decided/ in The
Process of
Implementation
Still Under
Consideration
Previously
With MVC
But Was
Later
Removed
No Wish
to
Implement
Not
Aware
of
MVC
All 100.0 33.8 0.5 6.7 0.9 53.1 5.0
By Establishment Size
25-199
Employees
100.0 13.6 0.5 9.0 1.2 65.9 9.9
200 or More
Employees
100.0 47.7 0.5 5.1 0.7 44.3 1.6
Note : Figures may not sum up due to rounding.










36

10 Information Sharing

Majority of employees were working in establishments that shared information

10.1 Overall, slightly over three in four (76%) employees were working in establishments that
shared information on their companys performance with their employees in 2012, comparable over
the last few years. The corresponding percentages were higher for employees working in larger
establishments (88%) than the SMEs (59%) (Chart 26).

Chart 26: Proportion of Establishments and Employees That Share Information With Employees,
1999 2012 (December)
Per Cent






Employee Establishment
A
l
l

I
n
d
u
s
t
r
i
e
s

B
y

E
s
t
a
b
l
i
s
h
m
e
n
t

S
i
z
e


70.1
71.3
74.7 74.4
78.2
76.1
77.8 78.5
75.9
76.9
75.2 75.8 76.3 76.0
D
e
c
-
9
9
D
e
c
-
0
0
D
e
c
-
0
1
D
e
c
-
0
2
D
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D
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D
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5
D
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0
6
D
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0
7
D
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D
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9
D
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1
0
D
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-
1
1
D
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-
1
2
53.3
54.2
59.3 58.8
63.9
58.5
62.8 63.2 62.5
63.5
60.8 60.2
61.3
59.3
D
e
c
-
9
9
D
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c
-
0
0
D
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0
1
D
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D
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D
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D
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7
D
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D
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9
D
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1
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D
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-
1
1
D
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1
2

54.2 54.6
60.0 59.8
64.7
60.5
62.9
64.3
62.7
64.4
61.3 61.3 61.4
59.0
85.2
86.9
89.5
88.2
90.1 89.3
88.4 88.3
85.3
86.8
85.5
86.4 87.1 87.8
D
e
c
-
9
9
D
e
c
-
0
0
D
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c
-
0
1
D
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c
-
0
2
D
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0
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D
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0
4
D
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5
D
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c
-
0
6
D
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c
-
0
7
D
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0
8
D
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0
9
D
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c
-
1
0
D
e
c
-
1
1
D
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c
-
1
2
25-199 Employees ! 200 Empl oyees
50.8
51.7
57.2 56.6
61.7
55.7
60.1 60.7 60.2
61.3
58.2 57.8
58.8
56.5
76.5
77.9
83.3
79.0
83.4
82.2 81.9
81.0
77.1
79.7 79.4
77.8
79.2 79.7
D
e
c
-
9
9
D
e
c
-
0
0
D
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c
-
0
1
D
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0
2
D
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D
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5
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6
D
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0
7
D
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D
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0
9
D
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1
0
D
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-
1
1
D
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c
-
1
2

37

Information sharing more prevalent among establishments with a flexible wage system

10.2 Information sharing continued to be more prevalent among establishments with a flexible
wage system. 62% of establishments with at least one wage recommendation shared information
with their employees compared with 47% of establishments without any wage recommendations
(Table 9).

Table 9: Proportion of Establishments and Employees in Establishments That Shared Information With
Employees by Type of Wage System, December 2012
Per Cent

All Establishments
With at Least One Wage
Recommendation
No Wage
Recommendation
Establishment
Count
Employee
Count
Establishment
Count
Employee
Count
Establishment
Count
Employee
Count
All 59.3 76.0 62.3 79.0 47.3 55.9
By Establishment Size
25-199 Employees 56.5 59.0 59.2 62.1 46.2 46.3
200 or More
Employees
79.7 87.8 81.9 89.3 62.0 71.7

10.3 Overall, one in three (32%) private establishments shared information at least annually
(Chart 27). In terms of employee coverage, close to half (46%) of private sector employees were
working in such establishments. This information sharing was more prevalent in large establishments
than the SMEs (Table 10).

Table 10: Distribution of Establishments and Employees by Frequency of Information Sharing,
December 2012
Establishment Count
Per Cent

All
Establishments
By Establishment Size
25-199
Employees
200 or More
Employees
Total 59.3 56.5 79.7
Regularly 31.8 29.3 50.3
Annually 13.5 12.8 18.7
Half-yearly 5.2 4.9 7.2
Quarterly 8.3 6.9 18.9
Monthly 4.8 4.7 5.4
As and when necessary 27.3 27.0 29.2
Others 0.2 0.2 0.3


38

Employee Count
Per Cent

All
Establishments
By Establishment Size
25-199
Employees
200 or More
Employees
Total 76.0 59.0 87.8
Regularly 45.7 31.1 55.8
Annually 15.3 13.1 16.7
Half-yearly 7.3 5.2 8.8
Quarterly 19.1 8.3 26.5
Monthly 4.0 4.5 3.7
As and when necessary 30.2 27.7 31.9
Others 0.2 0.2 0.1
Note : Figures may not sum up due to rounding.

Chart 27: Proportion of Establishments and Employees That Shared Information at Least Annually,
1999 2012 (December)
Per Cent

Employee Establishment
A
l
l

I
n
d
u
s
t
r
i
e
s


36.4 36.5
38.1
36.2
39.8
43.8
45.4 45.9
47.5
45.7 45.3
46.2 46.4 45.7
D
e
c
-
9
9
D
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0
0
D
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0
1
D
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0
2
D
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0
3
D
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0
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D
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0
5
D
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0
6
D
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0
7
D
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0
8
D
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0
9
D
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c
-
1
0
D
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c
-
1
1
D
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c
-
1
2
24.3 24.7
28.4 28.0
31.3 31.8
33.5
35.4
36.8
32.7
31.2 30.9
32.8
31.8
D
e
c
-
9
9
D
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0
0
D
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0
1
D
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2
D
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D
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D
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D
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0
6
D
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0
7
D
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0
8
D
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0
9
D
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1
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D
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1
1
D
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1
2

24.6
25.8
27.9 28.4
30.5
32.5 33.3
35.9
37.0
32.7
31.2 31.9 32.4
31.1
47.5
46.5
48.5
43.5
48.0
53.4 53.9
52.8
55.0 55.8 55.7
56.7 56.4 55.8
D
e
c
-
9
9
D
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c
-
0
0
D
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c
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0
1
D
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D
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D
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D
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6
D
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D
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D
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9
D
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0
D
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-
1
1
D
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-
1
2
25-199 Empl oyees ! 200 Employees
22.5 23.1
27.0 26.5
29.7 29.7
31.4
33.6
35.3
30.7
29.0 28.8
30.5
29.3
40.3 39.8
44.0
42.8
45.8
49.8
48.7 47.9
46.1
47.3 47.7
46.1
49.8 50.3
D
e
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9
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9
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D
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B
y

E
s
t
a
b
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s
h
m
e
n
t

S
i
z
e


39


11 Conclusion

11.1 The tight labour market continued to raise workers wages, but the pace of increase
moderated in 2012, amid the weaker economic conditions. After adjusting for inflation using
Consumer Price Index (CPI) for all items, real wages dipped in 2012, but increased slightly when
adjusted using CPI less imputed rentals on OOA. Over the long term, real wage increases have been
supported by productivity growth.

11.2 A large majority of employees in the private sector were under some form of flexible wage
system in 2012, following the general uptrend in the implementation of flexible wage measures
recommended by the tripartite partners in 2004. Having a narrow maximum-minimum salary ratio was
the most common flexible wage recommendation adopted, followed by linking variable bonus to KPI
and the MVC.













40

APPENDIX

Table 1: Total And Basic Wage Change By Industry, 2011 And 2012
Per Cent
Industry (SSIC 2010) Period
Total Wage Change Basic Wage Change
Total RAF NRAF Total RAF NRAF
ALL INDUSTRIES
2012 3.8 3.7 4.1 4.5 4.3 4.6
2011 5.3 4.7 5.9 4.4 4.0 4.9
Manufacturing
2012 3.7 3.6 3.8 4.3 4.2 4.5
2011 4.1 4.0 4.4 4.0 3.8 4.3
Construction
2012 3.7 2.9 4.9 3.6 2.8 4.7
2011 4.2 3.6 4.9 3.9 3.4 4.4
Services
2012 3.9 3.8 4.1 4.6 4.5 4.6
2011 5.6 5.0 6.3 4.5 4.0 5.1
Wholesale & Retail
Trade
2012 4.5 4.4 4.7 4.2 4.2 4.1
2011 4.6 4.3 5.0 4.1 4.0 4.4
Transportation &
Storage
2012 1.7 1.9 1.4 4.7 5.0 3.9
2011 7.4 7.1 8.1 3.8 3.8 3.9
Accommodation &
Food Services
2012 3.4 3.2 3.7 3.4 3.3 3.5
2011 4.5 4.5 4.4 3.8 4.0 3.4
Information &
Communications
2012 4.7 4.5 4.8 4.6 4.4 4.6
2011 4.6 4.3 4.8 4.5 4.2 4.7
Financial &
Insurance Services
2012 4.4 4.2 4.5 5.1 5.0 5.2
2011 9.1 8.1 9.4 7.4 6.0 7.7
Real Estate
Services
2012 4.4 4.9 3.3 4.6 4.6 4.6
2011 5.5 4.9 6.8 4.1 3.8 4.6
Professional
Services
2012 3.8 3.7 3.8 4.7 4.5 4.9
2011 5.6 5.2 5.9 5.0 5.0 5.1
Administrative &
Support Services
2012 4.7 4.8 4.2 4.8 4.9 4.4
2011 3.7 3.5 4.4 3.5 3.4 3.9
Community, Social
& Personal Services
2012 3.9 3.8 4.2 5.0 4.8 5.1
2011 5.0 4.3 6.0 4.2 4.0 4.4


41


Table 2: Proportion of Employees With Some Form of Wage Flexibility by Industry,
2011 And 2012 (December)
Per Cent
Industry
(SSIC 2010)
Period
Some Form of
Wage
Number of Key Wage
Recommendations Implemented
Flexibility
(A) + (B) + (C) Three (A) Two (B) One (C)
ALL INDUSTRIES
2012 87.2 15.4 29.5 42.3
2011 85.7 16.8 29.6 39.3
Manufacturing
2012 89.8 20.0 26.0 43.8
2011 87.2 19.5 30.8 36.9
Construction
2012 77.3 4.5 13.6 59.2
2011 75.5 6.7 11.3 57.5
Services
2012 89.0 16.6 34.7 37.7
2011 87.6 18.0 33.6 36.0
Wholesale & Retail Trade
2012 88.7 9.8 37.5 41.3
2011 88.4 10.8 37.0 40.6
Transportation & Storage
2012 92.4 24.5 41.2 26.6
2011 92.8 26.6 38.3 27.9
Accommodation & Food Services
2012 90.6 29.8 25.8 35.0
2011 90.6 29.5 19.7 41.5
Information & Communications
2012 89.7 3.8 43.8 42.1
2011 88.9 2.4 40.0 46.5
Financial & Insurance Services
2012 89.7 12.8 52.1 24.9
2011 86.7 29.0 38.9 18.8
Real Estate Services
2012 88.4 17.7 23.5 47.2
2011 82.5 16.2 27.4 38.9
Professional Services
2012 83.6 21.8 20.9 41.0
2011 87.6 21.4 28.1 38.1
Administrative & Support Services
2012 82.9 14.5 13.0 55.5
2011 83.8 14.4 16.1 53.3
Community, Social & Personal
Services
2012 92.3 14.4 42.1 35.8
2011 84.2 11.0 44.8 28.4

Note : Figures may not sum up due to rounding.

42

Table 3: Proportion of Employees in Establishments by Key Wage Recommendations and Industry,
2011 And 2012 (December)

Per Cent
Industry
(SSIC 2010)
Period
With
Maximum-
Minimum
Salary
Ratio
With MVC
With
Variable
Bonus
Linked to
KPI
ALL INDUSTRIES
2012 65.1 33.8 48.6
2011 62.5 34.8 51.7
Manufacturing
2012 64.8 35.5 55.6
2011 65.0 36.3 55.6
Construction
2012 71.2 10.9 17.7
2011 66.5 12.6 21.1
Services
2012 64.0 38.9 54.0
2011 60.4 39.3 57.4
Wholesale & Retail Trade
2012 68.7 24.0 53.2
2011 64.8 26.0 56.2
Transportation & Storage
2012 82.7 49.1 50.9
2011 67.6 51.0 65.8
Accommodation & Food Services
2012 86.3 38.5 51.2
2011 83.9 40.1 45.3
Information & Communications
2012 50.6 17.2 73.4
2011 48.5 11.1 74.0
Financial & Insurance Services
2012 34.2 56.1 77.1
2011 50.2 53.9 79.6
Real Estate Services
2012 77.5 33.2 36.6
2011 66.9 40.1 35.3
Professional Services
2012 56.0 31.7 60.3
2011 55.9 33.1 69.5
Administrative & Support Services
2012 72.5 23.3 29.0
2011 73.2 25.9 29.7
Community, Social & Personal Services
2012 51.1 58.1 53.8
2011 38.5 57.8 54.5


A-1

ANNEX 1
SURVEY COVERAGE
AND METHODOLOGY

SURVEY ON ANNUAL WAGE CHANGES, 2012


Introduction

The Survey on Annual Wage Changes, 2012 was conducted by the Manpower Research and
Statistics Department of the Ministry of Manpower under the Statistics Act (Chapter 317). The survey
fieldwork was conducted from 18 December 2012 to 4 March 2013.

Objective

The survey was conducted to obtain information on employers wage practices relating to the adoption
of flexible wage measures and the payment of basic wage increases and bonuses in 2012.

Coverage

The survey covered a sample of private sector establishments with at least 10 employees. Some
4,694 private establishments responded to the survey. These establishments employed 1,169,400
employees which included 582,000 full-time employees on the Central Provident Fund (CPF) scheme
with at least one year in service (comprising 300,800 rank-and-file employees, 222,100 junior and
59,000 senior management staff). The survey response rate was 90%.

The results were weighted to reflect the population of private sector establishments with at least 10
employees by using expansion factors based on sampling fraction.


Methodology

The survey was conducted online, with clarifications made over the phone. Respondents could also
submit their returns by post, email or fax.


Reference Period

The reference period for the survey was from November/December 2011 to November/December
2012.


A-2

Data Collected

The establishments were asked to provide information on the average basic wage change, Annual
Wage Supplement (AWS) and variable bonus to employees in 2012. The information collected
pertains to full-time employees on the CPF scheme who had been with the establishment for at least
one year as at 30 Nov 2012.

The establishments were also surveyed on the adoption of the three key recommendations of the
Tripartite Taskforce on Wage Restructuring namely:

(i) introduce Annual Variable Component (AVC) such as variable bonus in the wage system that
is linked to Key Performance Indicators (KPI) i.e. have formulated, communicated and
explained to their employees the KPI for the payment of the variable bonus;
(ii) introduce the monthly variable component (MVC) in the wage structure; and
(iii) narrow the maximum-minimum salary ratio for majority of their employees to an average of 1.5
or less.

Other information collected include establishments satisfaction with the level of flexibility of the wage
system, the percentage of monthly basic wages set aside to form the monthly variable component,
and maximum-minimum salary ratio of the most common job.

The survey included new questions to determine whether establishments gave a built-in wage
increase in 2012 to employees earning a basic monthly salary of up to $1,000 in 2011.

Analysis

The first part of the report on annual wage changes is based on private establishments with at least
10 workers.

The second part of the report on wage flexibility is based on private establishments with at least 25
workers, unless otherwise specified. This is to be comparable with figures for the Inaugural Survey on
Wage Restructuring as at June 2004.

Classification

The industries of the surveyed firms were classified according to the Singapore Standard Industrial
Classification (SSIC) 2010.

Reliability of Data
In a sample survey, inferences about the target population are drawn from the data collected from the
sample. Errors due to extension of the conclusions based on one sample to the entire population are
known as sampling errors. The sampling error of an estimate is the difference between the estimated
value obtained from a sample and the actual value from the population. Factors influencing the
sampling error include the sample size, the sample design, method of estimation, the variability of the
population and the characteristics studied.

The most common measure of the sampling error of an estimate is its standard error, which is a
measure of the variation among the estimates derived from all possible samples. An alternative
measure is the relative standard error of an estimate which indicates the standard error relative to the

A-3

magnitude of the estimate. A sample estimate and an estimate of its standard error can be used to
construct an interval that will, at specified levels of confidence, include the actual value. About 68, 95
and 99 per cent of estimates from all possible samples will fall within the interval defined by one, two
or three standard errors respectively on either side of the estimate. By statistical convention, the
confidence level has been set at 95 per cent.

Estimates of the sampling variability of selected indicators are as follows:


Estimate
Standard
Error
( %-pts)
Relative
Standard
Error (%)
95% Confidence
Interval
Lower Upper
Proportion of employees in
establishments that
implemented at least one key
wage recommendation by
number of recommendations
implemented

At least one
recommendation
87.2% 0.4% 0.4% 86.5% 88.0%
Three
recommendations
15.4% 0.2% 1.2% 15.0% 15.8%
Two
recommendations
29.5% 0.4% 1.3% 28.7% 30.3%
One recommendation 42.3% 0.6% 1.3% 41.2% 43.4%
Proportion of employees in
establishments that
implemented the key wage
recommendations
Variable Bonus linked
to KPI
48.6% 0.5% 0.9% 47.7% 49.5%
Monthly Variable
Component
33.8% 0.3% 1.0% 33.1% 34.4%
Maximum-Minimum
Salary Ratio
65.1% 0.5% 0.7% 64.2% 66.0%

A-4

Concepts and Definitions

Rank-and-File Employees: This includes employees who are in technical,
clerical, sales, service, production, transport,
cleaning and related positions. They are not
employees in managerial or executive positions.
Junior Management Staff: This refers to executives and managers who do not hold
senior managerial responsibilities. They do not have
substantial influence over hiring, firing, promotion,
transfer, reward or discipline of employees.
Basic Wages: This refers to the total basic pay before deduction of
employee CPF contributions and personal income tax. It
excludes employer CPF contributions, bonuses, overtime
payments, commissions, allowances (e.g. shift, food,
housing and transport), other monetary payments and
payments-in-kind.
Annual Wage Supplement (AWS): This refers to the annual payment usually made at
year-end and is commonly known as the 13th month
allowance.
Variable Bonus: This refers to the payment given over and above the
AWS or 13th month allowance. It includes incentive
payments and ang pows, but excludes AWS. The
variable bonus is usually linked to company and/or
individual performance and may vary from year to year.
It may be paid in a lump sum or divided into several
payments over the year; in which case the several
payments should be added together.
Annual Variable Component: This usually consists of two components i.e. AWS, and
variable bonus. Generally, the annual variable
component is linked to companys profitability.

A-5

Monthly Variable Component (MVC): This refers to the component of monthly basic wages that
can be adjusted expeditiously in response to changing
business conditions. It should attract CPF, overtime pay,
allowances, etc. The MVC can be built-up through wage
increase or hived off from basic wages. Establishments
can also implement a cut in basic wages by introducing
the cut as a reduction in MVC.


Formulae
Basic Wage Change in 2012

End 2012 Basic Wages End 2011 Basic Wages
= x 100%
End 2011 Basic Wages

Total Wage Change in 2012

2012 Total Wages 2011 Total Wages
= x 100%
2011 Total Wages
where
Total Wages = Annual Basic Wages + Annual Variable Component (i.e. Annual Wage
Supplement and Variable Bonus)


Total Wages (including employer CPF contributions) comprise basic wages, annual variable
component (i.e. bonuses) and estimates of employer CPF contributions.





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Just ReIeased Other Resources
.
Manpower Statistics in Brief, 2012 04/06/2012
Labour Force in Singapore, 2012 - 31/01/2013
Labour Turnover Time Series, 2006 to 2012 01/04/2013
Retirement and Re -employment Practices, 2011 20/07/2012
Focus on Older People n and Out of
Employment
29/07/2008
Quality of Employment Creation for Singapore
Citizens
29/02/2008
Employment of Singapore Citizens, Permanent
Residents and Foreigners, 1997 to 2006
29/02/2008
Premium on Fields of Study: The Returns to
Higher Education in Singapore
19/01/2007
Title Date of Release
Labour Mobility 31/05/2010
Employer Supported Training, 2010 02/09/2011
Singaporeans in the Workforce* 11/10/2011
* This paper is a collaborative effort between Manpower Research and
Statistics Department and Singapore Department of Statistics
Report on Wages in Singapore, 2011 29/06/2012
Singapore Yearbook of Manpower Statistics,
2012
29/06/2012
More releases are available online @ http://www.mom.gov.sg/mrsd/publication
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Conditions of Employment, 2012 20/12/2012
Job Vacancies, 2012 28/01/2013
!"#$%& $( )*+" ,%*-&.-"/0 1231
Date of Release: 05 Jun 2013
This report examines employers' adoption of a flexible wage system and
changes in their employees' wages in 2012. Topics covered include total and
basic wage changes, bonuses and wage flexibility.
45#6$75"(& 8.&9*&.$(0 :.%/& ;9*%&"% 123<
Date of Release: 30 Apr 2013
This quarterly release provides preliminary estimates of key indicators on the
manpower situation covering unemployment, employment and redundancy.
Labour Market, 2012 15/03/2013
Redundancy and Re-entry into Employment, 2012 25/04/2013