More private firms turn unprofitable, pulling down wage hikes, says MOM

Amongst the private firms with low-wage employees earning a monthly basic wage of up to $1,100, only 2 in 5 granted wage increases.

Singapore economy expands by 1.8 per cent in Quarter 1
The skyline of the central business district in Singapore Reuters

The proportion of profitable firms in Singapore has dwindled last year with only 76 per cent of private firms recording gains. According to the Ministry of Manpower's Report on Wage Practices 2016, firms have been on the rocks in the past year as 24 per cent incurred losses, an increase from the 21 per cent in 2015.

The report also noted that the total wages of private sector workers, which includes employer CPF contributions, rose slightly by 3.1 per cent, compared to the robust 4.9 per cent increase in the previous year. According to the labour ministry, this reflected an easing in basic wage growth from 4.2% to 3.5 per cent in 2016.

"Bonus payouts remained similar at 2.16 months of basic wage. After accounting for inflation, real total wage growth also moderated from 5.4 per cent to 3.6 per cent last year," MOM explained.

This has led to the proportion of establishments that raised total wages to go down to 58 per cent from 64 per cent in 2015. Meanwhile, more firms, around 17 per cent, decided to slash wages.

"As the majority of firms had put in place some form of flexible and performance-based wage system that gave the flexibility to adjust wages according to business conditions, total wage increase continued to moderate," MOM explained.

Amongst the private firms with low-wage employees earning a monthly basic wage of up to $1,100, only 2 in 5 granted wage increases. However, when it comes to following the National Wages Council suggested quantum for low-wage workers, 21 per cent did so, higher than the 18 per cent in the preceding year.

Similarly, whilst fewer establishments with low-wage workers on outsourced service contracts granted wage increases, more firms still adopted the NWC recommended quantum this year at 49 per cent.

"As the majority of low-wage employees on outsourced service contracts were working in PWM sectors e.g. cleaning, landscaping and security, they enjoyed higher wage increases than low-wage employees in general," the labour ministry added.

Singapore economy expands by 1.8 per cent in Quarter 1
The skyline of the central business district in Singapore Reuters

The proportion of profitable firms in Singapore has dwindled last year with only 76 per cent of private firms recording gains. According to the Ministry of Manpower's Report on Wage Practices 2016, firms have been on the rocks in the past year as 24 per cent incurred losses, an increase from the 21 per cent in 2015.

The report also noted that the total wages of private sector workers, which includes employer CPF contributions, rose slightly by 3.1 per cent, compared to the robust 4.9 per cent increase in the previous year. According to the labour ministry, this reflected an easing in basic wage growth from 4.2% to 3.5 per cent in 2016.

"Bonus payouts remained similar at 2.16 months of basic wage. After accounting for inflation, real total wage growth also moderated from 5.4 per cent to 3.6 per cent last year," MOM explained.

This has led to the proportion of establishments that raised total wages to go down to 58 per cent from 64 per cent in 2015. Meanwhile, more firms, around 17 per cent, decided to slash wages.

"As the majority of firms had put in place some form of flexible and performance-based wage system that gave the flexibility to adjust wages according to business conditions, total wage increase continued to moderate," MOM explained.

Amongst the private firms with low-wage employees earning a monthly basic wage of up to $1,100, only 2 in 5 granted wage increases. However, when it comes to following the National Wages Council suggested quantum for low-wage workers, 21 per cent did so, higher than the 18 per cent in the preceding year.

Similarly, whilst fewer establishments with low-wage workers on outsourced service contracts granted wage increases, more firms still adopted the NWC recommended quantum this year at 49 per cent.

"As the majority of low-wage employees on outsourced service contracts were working in PWM sectors e.g. cleaning, landscaping and security, they enjoyed higher wage increases than low-wage employees in general," the labour ministry added.

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