This article was originally published on 23 June 2020 and updated to reflect the mid-year bonus for 2021. Additional reporting by Angela Koo.
Good bonuses and job security. These are some of the reasons, among others, that may be cited when you talk to someone about why they are working in the civil service.
On Friday 27 November, the Public Service Division (PSD) announced that civil servants will not be receiving any year-end bonus in 2020 given the economic challenges our country is facing. This comes after the absence of the mid-year bonus, making 2020 a year where the civil service did not pay out any annual variable component (AVC). The civil service will continue to pay out the 13th month bonus, also known as the non-pensionable annual allowance (NPAA) to all civil servants.
Which brings us to the topic for this article. Are the bonuses paid out in the civil service as high as what some people make it out to be?
Who Are Considered As Civil Servants?
The first thing to recognize is that there is a small difference between the public service and the civil service.
The civil service is actually a subset of the larger public service division of the government which comprises about 146,000 workers. Within the Public Service is the Civil Service, comprising about 85,000 officers working in the Ministries and Organs of state. They work in various schemes of service, including the Administrative Service, legal, education, police, civil defence as well as other generic schemes.
Statutory boards (such as HDB, CPF Board, IRAS) have their own recruitment and human resource management policies. They are legally distinct and independent employers from the Civil Service. However, they will likely take their cue from the civil service when paying out bonuses.
What Are Bonuses Tied To?
Civil service bonus appears to share a relationship with GDP growth. As seen in their 2020 mid-year press release and 2020 year-end release, GDP growth is usually cited by the government to explain the rationale behind the bonuses paid out. In times of strong economic growth, bonuses tend to be higher. When the country is experiencing a slowdown, bonuses are usually lower.
Also, actual bonuses may differ based on positions within the civil service. Lower-wage civil servants may get higher bonuses proportion to their salary as there is usually a minimum bonus payout for most years. For example, in the 2018 year-end bonus, civil servants received either one-month of salary, or a minimum of $1,800, whichever is higher. This means a worker with a salary of $1,500 will get $1,800, which is $300 more than his one-month salary of $1,500. For 2020 year-end bonus, about 2,400 lower wage civil servants will receive a lump-sum payment of $1,200, in line with the recommendations from the National Wages Council, while all other civil servants did not receive any bonus, aside from the 13th month bonus.
It’s also possible to get a cut. As seen in 2020, there will be a one-off salary cut of either 0.5 months or one month for public officers at the superscale grade.
There are three components to the bonuses given out in the civil service.
The first is the 13th month bonus, which is usually automatically included.
You also have the mid-year bonus and the year-end bonus.
In some year, there may also be an additional one-off lump sum payment that the government may give. You may also receive a performance bonus.
How Much Has The Government Been Paying In Bonuses Over The Past 10 Years?
Ignoring one-off lump sum payment and performance bonus, which is not something you may get every year, here’s the level of bonus for civil servants over the past decade. We have automatically included the 13th month bonus and excluded any one-off lump sum payments.
|Mid-year||End-year||Total bonus (inclusive of 13th month, excluding any one-off lump sum)|
|Average (computed up to 2020)||0.42||0.69||2.11 months|
Source: Public Service Division (PSD)
Lower-wage civil servants may get higher bonuses than what is stated since there is usually a minimum bonus payout for some years. As we are only mid-way through 2021, the average bonus will be computed after the announcement of year-end bonus.
We can see that over the past ten years, average bonus (inclusive of 13-month but excluding any one-off lump sum bonus) is at 2.11 months. This means that a civil servant earning the median salary of $3,900 (as of 2019) will get about $8,229 in bonus each year.
Ironically, the last time there was no mid-year bonus was in 2009, when the global financial crisis hit Singapore’s economy hard. Year-end bonus for 2009 was at 0.25 months, capped at $750. The usual 13th month bonus was also given. Given that 2020 is a year of no bonus, except for the 13th month bonus, we can see the severity of the economic impact COVID-19 has on Singapore.
Update: For 2021, PSD has announced a 0.3 month mid-year bonus for civil service, on the back of the improving economic situation. This is probably well-earned as the civil service has worked hard to roll out the various government support measures and to keep ahead of the constantly changing pandemic situation.
The Civil Service Does Give Decent Bonus, But Don’t Assume It’s Always Guaranteed
Given that the civil service is the biggest employer of workers in Singapore, it should come as no surprise that many private companies would look to take reference from how much the government is paying out in bonuses. And since the government wants to encourage employers to share their profits with employees, it makes sense that it will do its best to set forth a good example.
At the same time, expecting a significant bonus each year, beyond the usual 13th month, is not something that we should take for granted. As shown in 2020, 2009 and even 2019, bonuses can be quite low or even zero in some years besides the 13th month salary. That said, there are also additional one-off lump sum payments given out in some years.
To end off, we don’t think bonuses should be the reason anyone should choose to join or stay in the civil service. While getting between 2 to 3 months (inclusive of the 13th month bonus) is good when the economy is doing fine, it’s likely that you will be able to enjoy a similar level of bonus in many private companies. When the economy isn’t doing well, expect your total bonus for the year to be between 1 to 2 months (inclusive of the 13th month bonus).
DollarsAndSense.sg aims to provide interesting, bite-sized and relevant financial articles.
Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.
If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.