Workers’ real wages grew at slowest pace since 2013: MOM survey
SINGAPORE — Wages of workers in the private sector grew at the slowest pace last year (3.2 per cent) since 2013 (2.9 per cent), after accounting for inflation, the Ministry of Manpower (MOM) said on Wednesday (May 30).
For this year, economists whom TODAY spoke to expect wage growth to stay around the same level, given the risk of higher inflation in the second half of the year.
In MOM’s latest wage survey results released on Wednesday, a higher proportion of workers, 78 per cent of some 600,000 local employees (with at least 1 year of service) polled, reported receiving a salary increase last year. This was up from 75 per cent in 2016.
The proportion of workers who received wage cuts also went down from 13 per cent in 2016 to 10 per cent in 2017 as the economy improved, according to MOM’s Report on Wage Practices 2017.
However, although nominal wages, including employer Central Provident Fund (CPF) contributions, went up to 3.8 per cent last year compared to 3.1 per cent in 2016, growth in real wages slowed to 3.2 per cent last year from 3.6 per cent in 2016, due to change of inflation from -0.5 per cent in 2016 to 0.6 per cent in 2017.
The survey also revealed that with the exception of transport and storage, administrative and support, and real estate sectors, nominal total wage growth in 2017 was the same or higher than 2016’s in most industries.
The proportion of profitable businesses rose in industries such as infocomm, and wholesale and retail trade, but declined in community, social and personal services and construction. Overall, the proportion of workers in profitable companies went up last year.
Economists asked about wage growth forecast for the year said they expect it to stay around the same rate.
Even though average inflation for the first four months of this year was only 0.2 per cent, CIMB Private Banking economist Song Seng Wun expects inflation to go up in the second half of the year due to increasing oil prices and stronger demand for workers.
UOB Bank economist Francis Tan similarly forecasts that this year’s inflation to be on par with last year’s.
He said he expects more companies, mainly from the services sectors, to be profitable this year, given the sector is growing at its fastest rate in two-and-a-half years. They would in turn would expand their workforce and increase their employees’ wages.
With the global economy growing well, Mr Tan also expects trade-related sectors such as manufacturing, finance and insurance, wholesale trade, transport and storage, and professional services should have the strongest growth this year.
Workers in community services such as education and healthcare should also see faster wage gains given the higher demand, he added.
Another segment expected to do well this year is the real estate industry, said Mr Song, given the higher number of transactions this year.
Both economists cited transport engineering, construction, accommodation and food services as the sectors which would continue to see the weakest wage growth.
MOM’s report on Annual Wage Changes 2017 covered 4,900 private establishments with at least 10 employees each, the response rate was 89 per cent.
Correction: An earlier version of this story reported that 78 per cent of some 1 million workers polled received a salary increase last year. This is incorrect. Around 600,000 local employers with at least 1 year of service took part in the survey. We apologise for the error.
