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July 6—Just short of nine out of 10 Singaporean employees have some sort of flexible wage structure, a decade high, a spokesperson for the city-state's Ministry of Manpower confirmed to Bloomberg BNA.
Some 85 percent of employers put some form of flexible and performance-based wage system in place during 2014, according to the ministry's Report on Wage Practices 2014, and “as of December 2014, 89 percent of the workforce in the private sector was under some sort of flexible wage system (i.e., at least one key wage recommendation), up from 86 percent in 2013,” the MOM spokesperson said.
Reaching this level has taken Singapore a decade and has been helped by its tripartite approach to employment issues, which brings employers, employees and the government into the decision-making process.
“The high in 2014 extended from a general uptrend in the implementation of the tripartite wage restructuring recommendations since their release in January 2004,” the MOM spokesperson said. “While some year-to-year fluctuations may be expected, the take-up rates have generally stabilized in recent years.”
• implementing a variable bonus linked to Key Performance Indicators (KPI),
• introducing the Monthly Variable Component (MVC) in wage structure and
• narrowing the average maximum/minimum salary ratio for the majority of employees to 1.5 or less.
This has allowed a much more flexible approach to pay.
KPIs are unique to each company and may include (for example) a company's profitability and revenue, while the MVC is that part of the monthly basic wage that can be quickly adjusted in response to changing business conditions, including (for example) overtime pay and allowances.
“The MVC can be built-up through wage increases or ‘hived off’ from basic wage,” the spokesperson said.
Having a narrow maximum/minimum salary ratio remained the most common wage recommendation adopted, two in three (66 percent) private sector employees working in such establishments in December 2014, MOM said in its recently published Report on Wages Practices 2014.
This was followed by linking variable bonuses to KPI (52 percent) and having the MVC (33 percent) in the wage structure.
The report flagged two other decade-long changes. One was the general increase in employees covered by at least one flexible wage component in smaller (25 to 199 employees) and large (200+ employees) businesses. In the former, the degree of coverage rose to 84 percent from 63 percent, in the latter to 93 percent from 85 percent.
Among economic sectors, transportation and storage led the way at 95 percent of employees covered followed by community, social and personal services and accommodation and food services both at 93 percent and construction at 81 percent.
To contact the reporter on this story: Michael Mackey in Bangkok at correspondents@BNA.com
To contact the editor responsible for this story: Rick Vollmar at email@example.com
The MOM's Report on Wage Practices is available at http://stats.mom.gov.sg/Pages/Report-On-Wage-Practices-2014.aspx.
For more information on Singaporean HR law and regulation, see the Singapore primer.
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