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SHRI/RDS Survey on 2005/2006 Wage Increase, Bonus, Recruitment Levels & Actions Plans for Low-wage Workers, Mature/Retired Workers and Possible Flu Pandemic.

1.0	Introduction
	SHRI in conjunction with RDS surveyed 271 companies in December 2005 to find out about their wage increase, bonus and recruitment plans and also what actions were being taken to help low-wage workers, mature/retired workers and prepare for a possible flu pandemic.

2.0	Summary of Key Findings
2.1	Business sentiment in December 2005 reached a record high.
2.2	Almost all companies (96%) were positive about business prospects over the next six months. Many companies, however, were still relatively restrained in their wage increase, bonus and recruitment plans because of continuing business uncertainties such as interest rate hikes and expectation of slower economic growth next year.
2.3	Wage increases this year averaged 3.2% higher than 2004’s 2.5%. The rate of wage increases, having accelerated from 1.3% in 2002 will likely slow down next year. Next year’s increases are expected to creep up only to 3.4%.
2.4	Variable bonuses (excluding AWS) this year will average 1.8 months, higher than last year’s 1.5 months. Next year’s bonuses, however, are expected to drop slightly to 1.7 months.
2.5	On recruitment, more companies hired this year, 82% compared to 77% last year but the number hired per company was slightly lower than last year’s. For next year, however, not only will there be less companies hiring (74%) but the number to be hired will also be significantly down.
2.6	Entry-level salaries stayed flat or came down slightly from six months ago.
2.7	Most companies were supportive of low-wage workers with more than half preferring to do it through the payment of paying higher bonuses.
2.8	On the need to employ mature and retired workers, more than half of the companies reported that they had some form of arrangement by way of project or contract jobs but only a small minority had special training or recruitment programs.
2.9	On the issue of a possible flu pandemic, two-thirds of companies were either developing or have already a business continuity plan in place.

3.0	Key Findings
	3.1	Business Prospects
		Current:	93% of companies reported satisfactory or better prospects (higher than the 88% in May 2005)
			- most satisfied sector was Aviation;
			- least satisfied sector was Consumer products/Retail.

		Next 6 months:	39% expected further improvements, 57% expected no change and only 4% expected prospects to worsen.
			- most optimistic sectors were Aviation and Government & related;
			- least optimistic sector was General Manufacturing.

		Only 4% expected prospects to worsen and these were companies from only 5 sectors namely:
			Chemicals and Related Consumer Products/Retail Electronics Manufacturing General Manufacturing IT/Hi Tech
		Four of the above, Chemicals and Related, Consumer Products/Retail, Electronics Manufacturing and General Manufacturing were slightly more pessimistic than in May 2005. US companies did very well (96% satisfied or better) and were also the most optimistic (45% expected further improvements) over the next six months. In terms of size, large companies fared very well (100% satisfied or better) compared to 88% of small companies and 95% of medium-sized companies. Small companies, however, were the most optimistic over the next six months.

3.2	Basic Wage Increase
	Overall, wages increased by 3.2% for the whole of this year. Ninety six per cent of companies increased wages this year and 4% froze wages (18% froze wages last year).
		Highest Paying Sector	: Financial/Insurance and IT/Hi Tech (3.7 to 3.9%)
		Lowest Paying Sector	: General Manufacturing (2.4 to 2.5%)
		US companies paid the highest increases (3.5 to 3.6%) while Japanese companies, the lowest (2.6 to 3.0%).

The basic wage increases projected for 2006 were 3.4% for all staff categories, managers, executives, non-executives.
	Highest Paying Sector	: Aviation and Finance/Insurance (4.0 to 4.2%)
	Lowest Paying Sector	: General Manufacturing (2.4 to 2.5%)
	Asia Pacific companies will pay the highest increase (3.8 to 3.9%) and Japanese companies, the lowest (2.9 to 3.1%).

3.3	Variable Bonus (excluding AWS)
	For 2005, the variables bonuses averaged:
		1.9 months	for Managers
		1.8 months	for Executives
		1.7 months	for Non-executives

		Highest Paying Sector	- Aviation (3.6 months)
		Lowest Paying Sector	- Food & Beverage/Leisure (0.9 to 1.0 month)

		Large Companies paid the highest (1.8 to 2.2 months) while small companies paid the lowest (1.5 to 1.7 months). Local companies paid the highest (1.9 to 2.2 months) while European companies paid the lowest (1.1 to 1.5 months).

For next year, bonuses were expected to be marginally lower at:
	1.8 months	for Managers
	1.7 months	for Executives
	1.6 months	for Non-executives

	Highest Paying Sector	- Aviation (3.2 months)
	Lowest Paying Sector	- Food & Beverage/Leisure (0.9 to 1.0 month)

	Large companies will pay the highest (1.7 to 2.2 months) while small companies expected to pay the lowest (1.4 to 1.5 months).

	Once again, local companies expected to pay the highest (1.9 to 2.1 months) while European companies expected to pay the lowest (1.2 to 1.4 months).

	3.4	AWS
		Most companies paid an AWS ranging from 0.98 to 1.02 months (average 1.0 month) of basic salary.

3.5

Recruitment

A total of 82% of the companies hired new staff this year. The numbers recruited per company this year were:

2005									2006
Mgrs			Execs			Non-Execs			Mgrs			Execs			Non-Execs
Min	Avg	Max	Min	Avg	Max	Min	Avg	Max	Min	Avg	Max	Min	Avg	Max	Min	Avg	Max
0	4	80	0	21	512	0	33	1041	0	2	25	0	12	553	0	26	1500

Next year, not only will there be less companies hiring (74%) but the number of people to be hired will be significantly lower, for managers it will be 50% lower and for executives and non-executives, 43% and 21% lower respectively.

3.6

Retrenchment

11% of companies retrenched this year – up from the 8% projected in May 2005.

The average number of people per company retrenched this year and the number expected to be retrenched next year were:

2005			2006
Mgrs	Execs	Non-Execs	Mgrs	Execs	Non-Execs
1	3	11	1	5	7

Next year, 5% of companies expected to retrench.

	3.7	Entry Level Salaries
		Entry-level salaries were unchanged from six months ago except for Nitec, Higher Nitec and Degree graduates which dropped about 2%.

3.8	Help for low-wage workers
	76% of companies agreed that some help should be given to low wage-workers. Out of these companies, more than half (55%) preferred to do it by paying higher bonuses.
		% of companies
	Pay higher bonuses	55%
	Pay higher wage increase	32%
	Reduce employee CPF contribution	13%
	Provide fixed quantum	5%
	Provide more training / skills development	4%
	Others	2%

3.9	Special arrangements for mature workers
	61% of the companies had some form of arrangement for mature workers. Out of these companies, slightly more than half (52%) preferred to employ them for project/contract jobs but only a small minority had special training (13%) or special recruitment programs (7%).
		% of companies
	Project / Contract jobs	52%
	Selected full-time jobs	22%
	Re-designed jobs	21%
	Part-time jobs	21%
	Special training	13%
	Flexible hours	9%
	Special recruitment	7%
	Job-sharing	5%
	Others	3%

3.10	Programs for re-employment of retirees
	55% of companies had special programs for re-employing retirees, more than half (55%) preferred employing them for project/contract jobs.
		% of companies
	Project / Contract jobs