REAL wages are expected to dip into negative territory this year on the back of smaller pay perks and steep inflation, a recent survey showed.
The survey by the Singapore Human Resources Institute and Remuneration Data Specialists (RDS) found that employers plan to hand out less in bonuses this year, with the lowest payments coming from the retail sector.
When a projected 4.2 per cent inflation is factored in, real wages will shrink by 2.7 per cent this year, compared to the gain of 0.9 per cent in 2011.
Variable bonuses will average 1.6 to 2.0 months of basic pay, lower than last year's 2.2 months, the survey found.
This does not include the annual wage supplement, commonly known as the 13th month payment.
Basic wages on the whole will still be on an uptrend with a projected average rise of 4.1 per cent - the same as last year.
But the slimmer bonuses will result in overall pay packages rising only 1.5 per cent on average.
The semi-annual survey involved 167 companies that were polled to find out about their business prospects, wage, bonus and recruitment plans.
According to RDS managing consultant Peter Lee, companies are still tenuous about the sustainability of the global economic recovery, preferring to shrink bonuses, while keeping pay raises constant this year.
"Inflation is the biggest problem for workers, but employers cannot afford to raise salaries more than 5 per cent due to current economic conditions,'' Mr Lee said. "With business costs going up, wage increases are not a good way to cover inflation.''
But the good news is that none of the companies polled has cut or plans to cut wages this year, while only 8 per cent have frozen or plan to freeze wages.
Meanwhile, the best bonuses will be in the oil and gas industry, averaging 2.8 months to 3.4 months.
The sector paying the lowest bonus is retail, at 0.8 month to one month.
Local companies were found to pay heftier bonuses than companies from other regions.
It is somewhat rosier on the recruitment front as more companies - 83 per cent versus 77 per cent in 2011 - added or plan to add staff this year.
The survey further found that most companies support the National Wages Council's latest recommendation on low-wage workers.
Some 78 per cent of employers approve of the new guidelines stipulating that companies enact built-in salary increase of $50 or more for workers earning no more than $1,000 monthly.
Nearly two-thirds of them expect little or no impact on their overall wage costs.
Many feel the council is in need of a makeover, with a majority thinking that more representation from different sectors should be included.
Mr Lee expects cost of living to continue rising faster than people's pay cheques, part of a "vicious cycle" of rising inflation and falling productivity.
The only way for the economy to overcome this is for top management to be more proactive in helping workers to raise their productivity by special skills training and job re-designing, he said.