Real total wages in Singapore, including employer CPF contributions, grew 5.4% in 2015, faster than the 3.9% growth a year ago, according to a Ministry of Manpower (MOM) report on Thursday.
But before you start celebrating, the latest figure is mainly due to a 0.5% drop in consumer prices last year.
That’s right, real total wages seems to be increasing at a faster pace, but only because overall inflation rates in 2015 was negative. Inflation eased from 1.0% in 2014 to -0.5% in 2015.
“Firms were less profitable in 2015 amid softer economic conditions. Fewer gave wage increases compared to the previous year, and wage increases moderated,” MOM revealed.
So how did wages in Singapore really fare last year? Here are 5 things you need to know.
1) Nominal wages grew at a slower pace
Nominal total wages in the private sector rose by 4.0% in 2015, down from the 4.9% increase in 2014. With the increase in employer CPF contribution rate in 2015, the growth in total wages including employer CPF contributions remained stable at 4.9% in 2015.
2) Fewer companies were profitable
Some 79% of private establishments reported that they were profitable in 2015, down from the 82% the year before. Only 12% of establishments reported they were more profitable in 2015, down from 16% in 2014. Some 29% of companies reported they were as profitable in 2015 as the previous year, down from 34% who reported doing as well in 2014.
More companies also reported that they suffered losses. Some 21% of establishments said they incurred losses in 2015, compared with 18% in 2014.
3) More employees were put under a flexible and performance-based wage
Some 90% of private sector employees were under some form of flexible wage system in 2015, the highest since 2004, said MOM. Two-thirds of employees had a narrower maximum-minimum salary ratio; just over half of employees, or 52%, had a variable bonus to Key Performance Indicators (KPI); and 32% had a Monthly Variable Component (MVC) included in their wage structure.
4) Fewer lower-income employees received wage increments
Less than half of employees in Singapore earning a salary of up to $1,100 in 2015 received a wage increment. Only 46% of lower-wage employees got a raise. This is compared to 59% in 2014 for employees earning up to $1,000.
According to MOM, half of the companies that did not grant wage increases said they were already paying the workers the market rate. Other cited poor business and high business costs as the reasons for not increasing wages.
5) Fewer companies raised employee wages in 2015
If you did not receive a pay increment in 2015, you’re not alone.
Only 64% of private establishments raised the total wages of their employees in 2015, down from 72% in 2014. In addition, some 11% of firms reported cutting the wages of employees in 2015, up from 7.7% the previous year.
Some 25% of firms kept wages unchanged last year, up from 20% in 2014.
This article first appeared in The Edge Singapore Market Report.