<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Wages eroded by inflation: MOM
</TR><!-- headline one : end --><TR>Govt data shows average real earnings shrinking 4% due to high inflation </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Sue-Ann Chia
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
</TD><TD vAlign=bottom>
Though wages grew 3.1 per cent in nominal terms between April and June, the impact of soaring food and fuel prices ? with inflation hitting a 26-year-high of 7.5 per cent in June ? meant that workers were actually worse off compared to a year ago. -- ST PHOTO: ALPHONSUS CHERN
</TD></TR></TBODY></TABLE>
<TABLE><TBODY><TR><TD>
View more photos
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->LATEST government wage figures confirm a trend that was evident a few months ago - high inflation eating into wage gains.
The Ministry of Manpower's (MOM) report on employment in the second quarter showed that workers across the board were worse off compared to a year ago, with real earnings - pay minus the effect of inflation - actually falling.
Wages grew 3.1 per cent in nominal terms between April and June. But the impact of soaring food and fuel prices - with inflation hitting a 26-year-high of 7.5 per cent in June - eroded such gains.
Workers, in effect, ended up seeing their real wages shrink by 4 per cent on average, compared to the same period last year.
The services sector was hardest hit, with workers' real earnings falling the most, by 4.6 per cent.
The dip was 2.3 per cent for those in manufacturing and 0.5 per cent for construction workers.
Inflation's squeeze on income first surfaced in the January to March period. But it was not so dismal then. Wage growth was still in positive territory, propped up by a 10.6 per cent increase in total wages over the same quarter a year ago, the highest in almost a decade.
Then, only manufacturing workers saw their real wages shrink due to inflation. But the malaise has now spread to other sectors owing to weaker wage increases in the second quarter.
Analysts are not optimistic that the real wage situation will improve even though inflation is expected to lessen towards the end of this year. That is because they expect wage increases to continue to lag behind inflation.
One reason for this, said DBS Bank economist Irvin Seah, is the economy's anaemic state.
The labour market is expected to soften, with more bosses halting hiring plans or scaling down wage increases.
'It is quite likely that real wages will remain in the negative territory till the end of the year. Even if it bounces back, it will be very weak growth,' he said.
His conclusion was borne out by a recent survey of 218 employers by the Singapore Human Resource Institute (SHRI) and Remuneration Data Specialists.
It found that wage increases will hover around 5.3 per cent this year, higher than last year's 4.5 per cent. But this is below the annual inflation forecast of 5 to 6 per cent.
But SHRI executive director David Ang pointed out that companies were doing their part to help workers cope. Almost half of those it polled are giving workers a one-off payment to offset the higher cost of living.
Another key finding from yesterday's MOM report: Labour productivity declined for the third straight quarter.
The contraction, at 7.5 per cent, was steep compared to 2.7 per cent in the first quarter this year, and 3.7 per cent in the October to December period of last year.
MOM attributed the poor productivity to many new jobs being created as employers hire in anticipation of the need for more workers to cope with new projects.
A total of 71,400 jobs were added in the second quarter, on the back of record gains in the construction industry due to the building boom, the report said.
Job creation in the first half of the year hit a record 144,600, compared to 113,800 in the same period last year.
Retrenchment also eased to 1,798 after rising for two consecutive quarters.
Among laid-off workers, 78.7 per cent got re-employed within six months of being retrenched.
This is higher than the 66.5 per cent in the previous quarter, and the 70 per cent in the same period last year.
But analysts like Standard Chartered Bank economist Alvin Liew are not so sanguine about job prospects in the second half of the year. '2008 is going to be weaker than last year, as growth is going to be bleaker,' he said.
[email protected]
<HR width="50%" SIZE=1>
'It is quite likely that real wages will remain in the negative territory till the end of the year. Even if it bounces back, it will be very weak growth.'
DBS Bank economist Irvin Seah
What to do? *hee*hee*
Oh yeah!
</TR><!-- headline one : end --><TR>Govt data shows average real earnings shrinking 4% due to high inflation </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Sue-Ann Chia
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
Though wages grew 3.1 per cent in nominal terms between April and June, the impact of soaring food and fuel prices ? with inflation hitting a 26-year-high of 7.5 per cent in June ? meant that workers were actually worse off compared to a year ago. -- ST PHOTO: ALPHONSUS CHERN
</TD></TR></TBODY></TABLE>
<TABLE><TBODY><TR><TD>
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->LATEST government wage figures confirm a trend that was evident a few months ago - high inflation eating into wage gains.
The Ministry of Manpower's (MOM) report on employment in the second quarter showed that workers across the board were worse off compared to a year ago, with real earnings - pay minus the effect of inflation - actually falling.
Wages grew 3.1 per cent in nominal terms between April and June. But the impact of soaring food and fuel prices - with inflation hitting a 26-year-high of 7.5 per cent in June - eroded such gains.
Workers, in effect, ended up seeing their real wages shrink by 4 per cent on average, compared to the same period last year.
The services sector was hardest hit, with workers' real earnings falling the most, by 4.6 per cent.
The dip was 2.3 per cent for those in manufacturing and 0.5 per cent for construction workers.
Inflation's squeeze on income first surfaced in the January to March period. But it was not so dismal then. Wage growth was still in positive territory, propped up by a 10.6 per cent increase in total wages over the same quarter a year ago, the highest in almost a decade.
Then, only manufacturing workers saw their real wages shrink due to inflation. But the malaise has now spread to other sectors owing to weaker wage increases in the second quarter.
Analysts are not optimistic that the real wage situation will improve even though inflation is expected to lessen towards the end of this year. That is because they expect wage increases to continue to lag behind inflation.
One reason for this, said DBS Bank economist Irvin Seah, is the economy's anaemic state.
The labour market is expected to soften, with more bosses halting hiring plans or scaling down wage increases.
'It is quite likely that real wages will remain in the negative territory till the end of the year. Even if it bounces back, it will be very weak growth,' he said.
His conclusion was borne out by a recent survey of 218 employers by the Singapore Human Resource Institute (SHRI) and Remuneration Data Specialists.
It found that wage increases will hover around 5.3 per cent this year, higher than last year's 4.5 per cent. But this is below the annual inflation forecast of 5 to 6 per cent.
But SHRI executive director David Ang pointed out that companies were doing their part to help workers cope. Almost half of those it polled are giving workers a one-off payment to offset the higher cost of living.
Another key finding from yesterday's MOM report: Labour productivity declined for the third straight quarter.
The contraction, at 7.5 per cent, was steep compared to 2.7 per cent in the first quarter this year, and 3.7 per cent in the October to December period of last year.
MOM attributed the poor productivity to many new jobs being created as employers hire in anticipation of the need for more workers to cope with new projects.
A total of 71,400 jobs were added in the second quarter, on the back of record gains in the construction industry due to the building boom, the report said.
Job creation in the first half of the year hit a record 144,600, compared to 113,800 in the same period last year.
Retrenchment also eased to 1,798 after rising for two consecutive quarters.
Among laid-off workers, 78.7 per cent got re-employed within six months of being retrenched.
This is higher than the 66.5 per cent in the previous quarter, and the 70 per cent in the same period last year.
But analysts like Standard Chartered Bank economist Alvin Liew are not so sanguine about job prospects in the second half of the year. '2008 is going to be weaker than last year, as growth is going to be bleaker,' he said.
[email protected]
<HR width="50%" SIZE=1>
'It is quite likely that real wages will remain in the negative territory till the end of the year. Even if it bounces back, it will be very weak growth.'
DBS Bank economist Irvin Seah
What to do? *hee*hee*
Oh yeah!
