Banking sector pay to go more flexible

THE pay packets of bank employees look set to change, following recommendations by a panel that wants to speed up the pace of wage reform in the banking sector. 

Chief among its suggestions is to get more banks to incorporate a monthly variable component (MVC) into salary structures. 

This way, employers can reduce costs quickly by snipping this portion of an employee's wage, instead of resorting to layoffs during a downturn. 

The aim is to get banks to build up the MVC to 10% of an employee's total wages – the nationally-recommended figure – within two to three years. 

The panel, which released its wage restructuring guidelines yesterday, also suggested changes to the two-month annual wage supplement (AWS), which is the industry average for unionised banks and is paid on top of bonuses employees may receive. 

It recommends that one month be retained as AWS – commonly known as '13th month pay' – while the other be incorporated into basic wages, bonuses or be channelled to build up the MVC. Banks can decide which option best suits their needs. 

As for bonus payments, it wants to see more banks link such payments more directly to company profits and individual performance. 

Panel members believe that with such changes, employees can expect bonuses that are higher than the current industry maximum of 2.5 months if they meet or exceed performance targets. 

“The whole thrust of wage reform is to make wage systems more flexible so that companies are more competitive,” Loh Oun Hean, Maybank's head of business operations and services, told a press conference. 

“Sometimes, it involves belt-tightening during bad times. But in good times, workers will be rewarded with more.” 

But he made clear that banks should not cut the MVC “just to boost profitability or improve shareholder value”. 

In a downturn, banks should look at cutting the MVC only after other cost-reduction measures, such as wage freeze or a bonus reduction. 

The panel recommended a framework under which an MVC cut or restoration could take place, but said that deciding on the trigger points of when to do this should be left to the banks to decide as each have different revenue models. – The Straits Times/Asia News Network  

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Next In Regional

Olympic host Tokyo hits record 2,848 COVID-19 cases, seeks more hospital beds
Covid-19: Number of deaths equals previous high of 207
‘Made in China, sold on Amazon’ merchants scramble to minimise losses after US platform closes over 50,000 Chinese shops
Indonesia's BRI Life probes reported data leak of 2 million users
Tokyo Olympics: Chinese athlete abused online after disappointing finish at Tokyo 2020
Speculation over whether Alibaba will re-enter music streaming gains traction after Tencent loses exclusive rights
China moves to protect food delivery drivers from digital exploitation, knocking stocks such as services giant Meituan
China’s tech giants go on hiring spree for fresh graduates despite Beijing’s crackdown on the sector
KLCI ends higher, bucking regional markets’ downtrend
Myanmar floods, coup, complicate growing COVID-19 outbreak

Stories You'll Enjoy