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Towers Watson 2013 Wage Credit Scheme Study - Singapore
 

Towers Watson 2013 Wage Credit Scheme Study - Singapore

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During the recent Budget 2013, the Singapore Government announced the implementation of the Wage Credit Scheme. ...

During the recent Budget 2013, the Singapore Government announced the implementation of the Wage Credit Scheme.

WCS is part of the 3-Year Transition Support Package where the Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage up to $4,000. In light of this announcement, Towers Watson conducted a pulse survey to test market reactions on how the Wage Credit Scheme will affect organizations, across a variety of topics. This report features key highlights of the survey results.

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    Towers Watson 2013 Wage Credit Scheme Study - Singapore Towers Watson 2013 Wage Credit Scheme Study - Singapore Document Transcript

    • Towers Watson 2013 Wage Credit Scheme Report May 2013
    • Wage Credit Scheme Report 2towerswatson.com May 2013 Background During the recent Budget 2013, the Singapore Government announced the implementation of the Wage Credit Scheme. Wage Credit Scheme is part of the 3-Year Transition Support Package where the Government will co- fund 40% of wage increases given to Singaporean employees earning a gross monthly wage up to $4,000. In light of this announcement, Towers Watson conducted a pulse survey to test market reactions on how the Wage Credit Scheme will affect organisations, across a variety of topics. This report features key highlights of the survey results. Towers Watson 2013 Wage Credit Scheme Report Key Highlights A. Organisation’s response to impact of Wage Credit Scheme and potential causes for concern In favour/ Somewhat in favour Indifferent/ Unsure Not in favour Over time... Long-Term (>12 months)Short-Term (0-12 months) Illustration 2: Organisation’s cause for concern ranking in light of the Wage Credit Scheme Increase in labour cost of operation Over-inflation of employees’ salary Better ability to hire and retain staff, at least within the first three years Adjustment needed on salary structure due to distortion Declining salary increase rate once the employee’s salary exceeds $4,000 Expanding income gap between local and foreign employees earning less than $4,000 Largest cause for concern Least cause for concern Illustration 1: Organisation’s response to impact of Wage Credit Scheme with respect to the short-term (0-12 months) and long-term (>12 months) period •• Illustration 1 suggests that in the short-term and long-term, majority of organisations are in favour of the Wage Credit Scheme. However, approximately 10% of organisations are less in favour of the Wage Credit Scheme over time. •• Illustration 2 is mostly aligned with Illustration 1 in that the largest cause for concern are concerns that organisations are likely to face in the long term, or after the Wage Credit Scheme’s eligibility period. 60% 50% 35% 35% 5% 15%
    • May 2013 Wage Credit Scheme Report 3towerswatson.com B. Organisation’s compensation element adjustments in light of the Wage Credit Scheme Table 1: Organisation’s actions in adjusting compensation elements as a result of the Wage Credit Scheme Compensation Elements Increase budget from original Observe the market before making a decision No change to original budget Base/basic salary 9% 42% 49% Guaranteed Bonus 3% 32% 65% Allowances 2% 26% 72% Variable Bonus 5% 37% 58% Figure 1: Organisation’s adjustment periods with respect to the different compensation elements *100% represents the respondents who responded “Increase budget from original” in Table 1 0% 20% 40% 60% 80% 100% 22 0 0 0 33 40 0 33 22 40 0 33 89 0 100 33 Variable Bonus AllowancesGuaranteed Bonus Base/basic salary % Mid-2013 % End-2013 %2014 %2015 22 20 17 % Decision Not Made •• Table 1 suggests that most organisations do not intend to change their original budget for all compensation elements. Organisations who will be increasing their budget are most likely to increase base/basic salary and to implement the increase in Mid-2013 (Figure 1). C. Initiatives organisations intend to invest in using credit obtained from the Wage Credit Scheme 1114 26 38 Boost training and development Enhance benefits (e.g. medical insurance) Improve work arrangements (e.g. flexible work arrangement) Increase headcount Embark on special projects (e.g. consultants) 16 8 Figure 3: Investment of credit obtained: People initiatives Figure 4: Investment of credit obtained: Other initiatives 2928 19 22 20 Infrastructure Technology Processes optimisation •• With respect to people-related initiatives, boosting training and development is of most interest, followed by enhancing benefits and embarking on special projects (Figure 3). With respect to other initiatives, processes optimisation is of most interest, followed by technology and infrastructure (Figure 4). 13% To fund further increase in gross monthly wage 23% Towards organisational initiatives 25% Hybrid of funding further increase in gross monthly wage and other initiatives 39%No specific investment of the credit Figure 2: Avenues of channeling credit obtained from the scheme
    • May 2013 Wage Credit Scheme Report 4towerswatson.com D. Other Findings •• Interestingly, most organisations surveyed have not received any expectations for a higher increase from any employee groups. Towers Watsons’ Point of View How Organisations Can Maximise Use of the Wage Credits Contrary to the government’s objective of increasing the pay of Singapore’s low-wage workers, majority of the organisations are not intending to adjust employees’ compensation due to the introduction of the Wage Credit Scheme. Organisations are encouraged to consider boosting its productivity- related initiatives such as investing in training & development, technology and process optimisation to raise the skillsets of the targeted employees and hence equipping employees with the necessary knowledge and skills to advance their careers. Compounding Effect on Fixed Labour Cost in the Long Run Concerns were raised pertaining to the compounded increase of fixed labour cost. As the wage credits are applicable to the increase in employees’ gross monthly wages (inclusive of allowances and bonuses), organisations can consider rewarding through other forms of Total Rewards such as additional allowances or bonuses during the 3 year period without increasing long-term fixed labour cost. Value Proposition and Total Rewards Strategy for Employees are Anticipated to be Changed With the focus of boosting productivity-related initiatives, organisations should review its existing employee value proposition and total rewards strategy. Review the current total rewards mix and understand the potential changes in terms of the spend on monetary vis-a-vis non-monetary rewards. Enforcing communication with employees will help employees understand their employment deal with the organisation and increase appreciation of the investments made to the employees for longer-term gains through productivity-related initiatives. Participant Profile •• 103 organisations participated in Towers Watson 2013 Wage Credit Scheme survey. •• Participants came from a range of industries, including Insurance, Reinsurance, Utilities, Real Estate, Industrial Manufacturing, Banking, Healthcare/ Pharmaceuticals, High Tech/ Semiconductor/ Telecommunication, Retail & Wholesale and Consumer Products, among others. •• On average, organisations have 24% of their headcount qualify for the Wage Credit Scheme of which a majority of these employees are in support* positions. *Employees in support positions are employees that require vocational training, but does not require a university degree. 47.6% All employees 24.3% Will not extend the actions to other employee groups 14.6% 13.6% All employees earning less than $4,000 Others Figure 5: Employee groups organisations intend to extend changes to Local corporation Subsidiary or division of a local corporation Local subsidiary of a foreign corporation Joint venture between local and/or foreign corporation 33% 58.3% 1.9% 1.9% 4.9% Not for profit organisation Figure 6: Corporate structure of participants
    • May 2013 Wage Credit Scheme Report 5towerswatson.com We would like to thank the following organisations for their participation ADVANCED MATERIALS TECHNOLOGIES PL AEROSPEC SUPPLIES PTE LTD AGC Chemicals Asia Pacific Pte Ltd Allianz Global Corporate and Specialty APM Property Management Pte Ltd Apple Arab Bank plc Arrow Electronics (S) Pte Ltd Asia Capital Holdings Pte Ltd AT&T Singapore Pte Ltd AustAsia Food Pte Ltd Banyan Tree Corp Pte Ltd Baxter Healthcare Becker Marine Systems Asia Pte Ltd Brady Corporation Asia Pacific Pte Ltd Cameron (Singapore) Pte Ltd Cargill International Trading Pte Ltd Carrier Transicold Pte Ltd CGGVeritas Services (Singapore) Pte Ltd Changi Airport Group (Singapore) Pte Ltd City Developments Limited CitySpring Infrastructure Management Pte Ltd CTS Singapore Pte Ltd DB&B Pte Ltd DFS Technology Pte Ltd Edwards Lifesciences (S) Pte Ltd Embraer Asia Pacific Pte Ltd Federal Express (S) Pte Ltd FEI Company Great Eastern Life Assurance Co Ltd Harley-Davidson Asia Pacific Pte Ltd HeidelbergCement Asia Pte Ltd Hewlett-Packard Singapore (Private) Limited IBM SINGAPORE PTE LTD ID Architects Pte Ltd II-VI Singapore Pte Ltd Infineon Technologies Asia Pacific Pte Ltd Instron Singapore Pte Limited John Wiley & Sons Singapore Pte Ltd Johnson Controls KEE SONG BROTHERS POULTRY INDUSTRIES PTE LTD Keppel Land International Ltd KOHLER SINGAPORE PTE LTD Kong Meng San Phor Kark See Monastery LONDON CONSTRUCTION PTE. LTD. Lum Chang Holdings Limited Manulife Meiden Singapore Pte Ltd Mercer Mizuho Corporate Bank, Ltd. MOL SHIP MANAGEMENT (SINGAPORE) PTE. LTD. Molex Singapore Pte Ltd NISSEI ASB PTE LTD NTUC Club Panasonic Asia Pacific Pte Ltd PCS Security Pte Ltd Peninsula Excelsior Hotel Prudential Assurance Company Singapore (Pte) Limited QIAGEN SINGAPORE RCL Feeder Pte Ltd Robinson Group Roche Singapore Technical Operations Pte Ltd Rohde & Schwarz Asia Pte Ltd RSA Sabre International, LLC sanofi-aventis SANWA PLASTIC INDUSTRY PTE LTD Senoko Energy Pte Ltd SHIMANO (S) PTE LTD SIIX Singapore Pte Ltd Singapore Press Holdings Singapore Technologies Electronics Limited Singapore Technologies Marine Ltd Singapore Telecommunications Limited Singapore Turf Club SKF Asia Pacific Pte Ltd Smith & Nephew Pte Ltd SMOE PTE LTD Sonoco Singapore STANDARD CHARTERED BANK Starvision IT STMICROELECTRONICS Sumitomo Electric International (Singapore) Pte Ltd Sunny Metal Swarovski Singapore Trading Pte Ltd Tat Hong Heavy Equipment TBWA Singapore Pte Ltd The Bank of East Asia, Limited The Hearing Solution Company Pte Ltd The Polyolefin Company (S) Pte Ltd The Toa Reinsurance Company Limited, Singapore Branch Tiger Airways Holdings Trane Distribution Pte Ltd Transit Link Pte Ltd United Engineers Ltd WBL Corporation Limited Welch Allyn Singapore Pte Ltd Wing Tai Holdings Limited WIPRO UNZA SINGAPORE PTE LTD YAMAUCHI SINGAPORE PTE LTD Yokogawa Engineering Asia Pte Ltd Zuellig Pharma Specialty Solutions Group