Jorbb's Blog!: 2 in 5 companies foresaw need to cut wages in 2009

According to findings published by the Ministry of Manpower, two in five private establishments foresaw the need to cut wages in 2009 if conditions worsen. This was during the period in December 2008 when Singapore's Gross Domestic Product (GDP) for the quarter contracted over the year by 4.2%.

Meanwhile, companies with a Monthly Variable Component (MVC) in their wage structure were more confident of gaining their employees' acceptance of a wage cut, if it has to be implemented compared with establishments without MVC.

These were published in the 320-page 'Report on Wages in Singapore, 2008' published by the Ministry of Manpower's Research and Statistics Department.

Other key findings of the report include the following:

Only a small minority (1.7%) of private establishments with MVC in their wage structure cut the component in 2008, as economic conditions deteriorated sharply only from the last quarter of 2008 when GDP contracted over the year by 4.2%.
The top two common measures of wage cut are cutting the annual variable component (74% of establishments) and basic wage (47%), followed by MVC (15%) as the latter was weighed down by establishments without MVC.
As of December 2008, 84% of the workforce in the private sector was under some form of flexible wage system, same as a year ago. Large establishments (employing 200 or more employees) continued to lead in the implementation, with the vast majority (90%) of their workforce having at least one key wage recommendation in their wage system, compared with 75% in small and medium enterprises.
With the economic downturn and increased business costs in 2008, employers were more restrained in granting salary increases.
Occupations requiring higher skills and knowledge continued to command higher wages. In June 2008, the median monthly gross wages was the highest for managers ($6,400), followed by professionals ($4,405) and associate professionals & technicians ($3,000). Clerical ($1,960) and sales & service workers ($1,849) were paid close to $2,000. Among blue-collar occupations, the production craftsmen ($2,137) and plant & machine operators ($2,009) were paid much more than the group of cleaners, labourers & related workers ($975).
Wages are generally observed to rise with age as workers gain experience and skills and become more productive over the years. The pace of wage increase with age is more pronounced among managers and professionals as their work is generally more knowledge intensive.