SINGAPORE — Against the backdrop of a weakened global economic outlook and uneven demand for labour across sectors, the Government will be paying a mid-year Annual Variable Component (AVC) of 0.45 month to civil servants, a shade lower than what was given last year. 

About 1,500 civil servants in the low-wage category will also get a raise of between S$20 and S$25 in addition to the S$30 increment to their monthly salary, said the Public Service Division (PSD) in a media release on Tuesday (June 14).

The PSD’s announcement came amid slower economic growth, with analysts in March cutting the growth forecast for this year to 1.9 per cent. 

Economists interviewed said that the mid-year bonus for civil servants — referenced by statutory boards and the private sector when deciding on pay and bonuses — is reflective of current economic sentiment and in line with the expected economic growth. 

In the release on Tuesday, the PSD noted that while the raise for low-wage officers is lower than the National Wages Council’s recommendation of S$50 to S$65 for those earning up to S$1,100, all civil servants are already earning above this benchmark. 

Currently, civil servants in Grades IV and V of the Operations Support Scheme earn between S$1,205 and S$1,843 every month. 

Hence, a Grade V officer earning S$1,300 per month will get a S$30 increment to his monthly pay and a S$25 additional raise this year, resulting in a new monthly salary of S$1,355.

In the past two years, civil servants got a mid-term payout of 0.5 month,  as the Singapore economy grew by 2.1 per cent last year and 2.9 per cent in 2014. Low-wage public officers received wage increases — on top of annual increments — of S$30 and S$70 last year and in 2014, respectively.

The PSD said that the mid-year payments, which will be made next month, were decided in “close consultation” with public sector unions.

National Trades Union Congress (NTUC) assistant secretary-general Cham Hui Fong said in a statement: “Considering the slowdown in our economic growth, the payment fairly rewards civil servants for their dedication and contributions.”

She added that the NTUC will work closely with the public sector to promote reskilling efforts and raising productivity in the workforce.

Mr G Muthukumarasamy, general secretary of the Amalgamated Union of Public Daily Rated Workers, noted the AVC was lower, but said the additional wage increase is a “booster” that will help lower-wage public servants and their families during these challenging times.

Mr Yeo Chun Fing, general secretary of the Amalgamated Union of Public Employees, called the package “fair”. “We hope that if the economy recovers, the Government will duly reward our civil servants,” he added.

UOB economist Francis Tan said the downward adjustment of the mid-year bonus is in tandem with the expected decline in economic growth this year. Last year’s mid-year bonus was 0.5 month when growth was expected to be at least 2 per cent, and the growth forecast is lower this year. 

Government spending will be needed to boost economic growth in the current climate, he noted. 

“This bonus is important as it will help to spur consumption,” said Mr Tan, adding that the PSD also has to send the right signal to the private sector and be mindful of being excessive. 

DBS senior economist Irvin Seah, who described the mid-year bonus as “fairly benign and conservative”, said it will send a signal to employees in the private sector to adjust expectations.

Asked whether the private sector could match the public sector’s payouts, the economists said it would vary from firm to firm. Mr Seah said payouts are based on performance, and this differs even within industries and companies.