Performance-based pay peaks in Singapore

by Hannah Norton05 Jun 2015
The number of employers adopting flexible and performance-based wage systems rose to a decade high last year, according to the latest figures released by the Ministry of Manpower (MOM).

Released yesterday, MOM’s Report on Wage Practices 2014 had some interesting revelations.

These included the fact that Singapore companies were continuing to respond positively to tripartite recommendations on wage restructuring.

“Most employers have adopted some form of flexible and performance-based wage system, with the proportion hitting a decade-high in 2014,” a release from MOM said yesterday.
A large majority (89%) of Singapore employees in the private sector were found to be under some form of flexible wage system in 2014 - the highest since June 2004.

The most common wage recommendation adopted was having a narrow maximum-minimum salary ratio, with two in three (66%) private sector employees working in such establishments in December 2014.

This was followed by 52% of employees who were on a pay structure which linked variable bonus to Key Performance Indicators (KPI).

Having the Monthly Variable Component (MVC) in the wage structure came in at third with 33%.

Total wages (including employer CPF contributions) in the private sector rose by 4.9% in 2014 – slowing from a 5.3% increase in 2013, the report showed.

Low-wage workers continued to see wage increases. Fifty-nine percent of private companies with employees earning up to $1,000 either gave, or intended to give wage increases to these employees last year – less than 77% in 2013 but on par with the 60% in 2012.

And Singapore HR directors should prepare for further increases for low-wage workers, following the Government’s announcement this week that it will implement recommendations by the National Wages Council from next month. These recommendations included increasing wages by at least $60 for workers earning a basic monthly salary of up to $1,100 from 1 July this year.

MOM’s latest report found that since the introduction of the National Wages Council (NWC) quantitative guidelines in 2012, the proportion of full-time resident employees earning a monthly basic salary of up to $1,000 is estimated to have decreased from 9.8% in 2012 to 6.8% in 2014.

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