Salaries in the private sector grew by 4.9 per cent last year, down from 5.3 per cent the previous year, amid slower economic growth.

Meanwhile, overall salaries rose by 3.9 per cent - up from 2.9 per cent in 2013 - taking inflation into account and including basic pay, bonuses and employers' Central Provident Fund contributions.

The Ministry of Manpower's (MOM's) Report On Wage Practices, released yesterday, also showed that inflation eased to 1 per cent last year, compared with 2.4 per cent the year before.

The report is based on a survey of around 5,200 private sector companies with 10 or more staff between December and February.

It takes into account the wages of full-time workers among citizens and permanent residents.

The ministry also released data showing that productivity gains have not grown in tandem with wages. Productivity fell 0.8 per cent last year from 0.3 per cent in 2013.

This trend has played out over the last 10 years.

From 2004 to last year, labour productivity rose by an average of 0.7 per cent each year, while real total wages grew 1.9 per cent per year.

In its report, the ministry noted that fewer companies - nearly six out of 10 last year, compared with about eight in 10 in 2013 - gave or intended to give workers earning below $1,000 a month a pay hike.

But the number of firms giving raises to low-wage workers last year was similar to the figure in 2012, when the National Wages Council specified that workers with a basic monthly pay of up to $1,000 should get a built-in increase of at least $50.

MOM said that most firms which did not increase the salaries of low-wage workers explained that they were already paying the market rate or their businesses were not doing well.

In line with tripartite recommendations to restructure wages and boost competitiveness, the ministry noted that more firms are adopting flexible wage practices, such as linking bonuses to performance and introducing variable components into monthly wages.

Last year, 89 per cent of staff working in private firms had some form of flexibility in their wages, the highest in a decade.

Human resource experts agreed, saying that on average, firms are giving performance-based bonuses that make up about 20 per cent of workers' annual salary package. Bonuses are rewarded based on factors such as productivity and whether targets are met.

Singapore Human Resources Institute president Erman Tan said: "Performance bonuses keep workers engaged. They know that how well they do affects the company's overall performance and, in turn, how much they can earn."

But David Ang, director of training and consultancy firm Human Capital Singapore, pointed out that in the future, good bonuses and salary increases will be possible only with productivity gains.

"In this tight labour market, productivity growth is even more crucial for the survival of firms," he said.

Workers said performance bonuses keep them on their toes. But they added that the amount they take home also depends on the overall business environment.

Said H. W. Teo, 30, a marketing executive at a fashion firm: "I have not received bonuses for the last three years as the fashion industry has not been doing well. Hopefully things will improve and we can get some bonus this year."