This festive season, the 80,000-strong civil service will have cause for cheer. They will get a year-end annual variable component (AVC) bonus of 1.1 months, on top of their traditional 13-month bonus, the Public Service Division (PSD) said.

Together with a mid-year bonus of 0.4 months, their total bonus for the year stands at 2.5 months. This is half a month more than last year's total bonus package of two months - 0.3 month in the middle of the year, 0.7 month at the end, and a 13-month bonus.

This year's higher bonus comes amid better than expected economic growth. Singapore's economy is expected to grow 3.5 per cent to 4 per cent this year, compared to one to 3 per cent forecast at the beginning of the year.

This year, lower-wage workers will get a minimum AVC of $1,600. The bonus floor will benefit 1,300 civil servants earning less than $1,460 - the threshold for a 1.1 month bonus amounting to $1,600. "This signals the government's continued commitment to help lower-wage workers," PSD said.

Welcoming the news, Amalgamated Union of Public Daily Rated Workers general secretary G Muthukumarasamy said the minimum variable bonus for low-wage workers will help "in view of inflation and the significantly higher cost of living".

National Trades Union Congress (NTUC) assistant secretary-general Cham Hui Fong said that this year's bonus decision was the result of extensive discussions between the PSD and NTUC. "The labour movement is glad that our civil servants will be fairly rewarded for their commitment and dedication to the public service ... (we) will work closely with tripartite partners to further enhance workers' capabilities and improve productivity," she said.

Smaller companies in the private sector, however, might have a tougher time matching the government payout.

Said Association of Small and Medium Enterprises (Asme) president Chan Chong Beng: "On the whole, quite a number of SMEs are feeling the pinch of higher costs and higher rentals, and cannot expand ... Some SMEs may have to follow the government payout, not because they are making profits, but because they have to retain their people."

The AVC and the 13-month bonus will be paid in December.