There was happy news for about 30% of our workforce on Thursday as the Public Service Division announced that civil servants will get a year-end Annual Variable Component (AVC) of 1.1 months. This was significantly higher than the previous year’s bonus (0.7months) and the mood in office on Friday was already approaching celebratory even though there was still more than a month to go before Christmas.
Since I am employed by the public sector, I am a beneficiary too. And to be honest, this amount was slightly higher than what I had anticipated. Because of this, I also made some interesting observations of our behaviour during these past few days:
====================
1. Attractive annual package for civil servants
Together with the mid-year bonus payout of 0.4 months, I will be getting a total of 1.5 months of AVC this year. If we include the Non-Pensionable Annual Allowance (NPAA) also known as the 13th month bonus which almost all companies dish out, it adds up to 2.5 months. And not forgetting the performance bonus (expected to be around 2.5 months for me), my bonuses for the year actually total 5 months.
That’s actually not an amount to be sniffed at. After working in this job for almost 3 years, I can slowly understand the attractiveness of a “government job”. Not only is there job security, bonuses are also pretty stable and generally above average? Even though Mrs 15 HWW’s monthly pay is higher than mine, her conservative (more like miserly) employer only rewards her with the NPAA bonus. If we compare the annual package, my overall income will exceed hers by close to $15k!
2. Bonuses pegged to economic growth
Rumour has it that the AVC is calculated using a complicated and undisclosed formula. But what everyone knows is that it is pegged to the state of the local economy. Singapore’s economy was expected to grow at around 1.5% in 2012 vs the 3.5% to 4% expected this year, explaining the bumper payout this year.
Prior to the announcement on Thursday, I found myself fervently rooting for the economy (not that it makes a difference). And I doubt I was the only one. Many could be thinking:
So what if a loose immigration policy is needed? The daily noise at the construction site next door can also be justified if I can get one more month of bonus! The negative consequences of high economic growth like rising prices (especially on houses and cars) and packed trains might also be bearable for the sake of GDP growth?
Using GDP growth as an indicator has its flaws. If I break my window and get someone to replace it, it’s a positive contribution to GDP even though there’s really no value add. And in recent years, most of the fruits of GDP growth have actually gone into the pockets of the few. But it’s still hard for the country not to obsess over GDP when 30% of the citizens’ income is pegged to it.
3. Frame income annually to reduce the “windfall spending behaviour”
“Any plans for a year-end holiday? Getting that new wallet/handbag from Chanel/Prada? How about an additional charm from Pandora? Or a new Samsung Note III?”
These questions were buzzing in the office on Friday. Most people treat these year-end payments as a windfall, something on top of their income and thus, most of it is likely to be spent on frivolous stuff. It’s like a person becoming more carefree with their expenditure after striking the lottery.
However, the 15 HWW household doesn’t see it this way. These bonuses are actually part of the annual package to compensate us for the “blood, sweat and tears” in the office. Furthermore, we have already made an estimate of these bonuses and included them to come up with our annual income of $120,000. Since our minimum target is to save $70,000 of that income, we are more unlikely to blow the bonuses on unnecessary big-ticket items.
And seriously, the 13th month bonus should not even be considered a bonus. We are paid for the days/weeks we work. Otherwise, why are we paid the same in February even though we work at least two days less compared to most other months? The 13th month bonus is actually just deferred (or worse, withheld) pay for the extra 4 weeks we work every year.
Therefore, framing our income annually instead of obsessing over the usual monthly paycheck would also make us view our bonuses differently. However, if you’re feeling miserable because all your colleagues are all out there splurging their bonuses, perhaps you could use the “additional 0.2-0.4 months” that was above the expectation to give yourself a small treat. That’s probably what I would do. =)
===================
Congrats on your 5 months bonus. That is actually a lot for the government sector. My friend working in the public sector doesn’t get as much as you.
I don’t even get this much in the private sector also. Which ministry are you in? haha
Hi SGYI,
I think the only difference for most public sector employees is in the performance bonus. I guess mine is slightly above average.
And for your info, I am not working directly in a Ministry. =p
5 Months are certainly cool. Is it a norm for most of your colleague ? Just curious, is the CPF contribution from Employer and Employees the same for government sectors.
Hi Cory,
I think for this year, the norm should easily be around at least 4 months for most public sector employees?
Guess the CPF con is the same for both government and private sectors. No difference between me and my wife.
Crazy bonus. Why would anyone leave a job like that
Hi Drizzt,
Whether it’s crazy is really subjective? I have friends in the private sector getting more than 6 months of bonuses every year.
Maybe I am idealistic/naive, but I am looking for more meaning and work satisfaction than what I am having in my current job.
Hi HWW
Congrats on your bonus. I am envious of your bonus and make me think twice about wanting to join a public company.
What drawbacks do you think public sector has in comparison to the private sector? I have heard a lot that promotions are most likely for scholars and they look a lot on academics. Is that true?
Hi B,
As I say, it’s always fairer to compare the annual compensation.
I feel that the culture in the public sector is likely to be similar in big private companies. (Especially cost centres?) Quite a lot of layers, processes and red tape. And from my observation, there is increasing distinction between good performers and average/poor performers. (More like private sector?)
Since the starting pay is strongly pegged to your degree and honours, it is true that academic results do play a role. The difference is even more stark between degree and non-degree holders. It’s just like army when an experienced encik has to call a young upstart “sir”.
You could open a can of worms and people may start complaining and it may lead to a cap in future.
Watch out for green eyed people….
Hi sgdividends,
Thanks for your concern and really appreciate it.
It was never my intention to draw attention to my own bonuses. Guess the message of “bonuses are a substantial part of your income and should be treated just like your normal paycheck” was not sent across well.
As civil servant, always be discreet about your bonuses and not brag about it in your blog.
Regards,
SG Wealth Builder
Was once a civil servant. Academics and scholars have better promotion, others average work and nobody will notice you. Bonus difference is really due to the performance bonus you receive, otherwise its the same almost as everybody. Private is just as good if not better.
I’ve been considering a midlife career switch to the public sector, but after working for the last decade in an industry where 9 months bonuses and share options have been the norm for a while, it’s hard to make the switch. I’ve had family friends call my mum up every year to find out how much bonuses I ended up with that year.
But the windfall mindset doesn’t appear to change between industries. For a number of years, we always ran out of parking spaces in the immediate months after bonus day. I’ve also saved my bonuses because it was quite intimidating trying to spend such a large amount at one go.
Anyway, Congrats on your bonuses and good for you for saving it. Don’t forget to enjoy a little!
Hi Miss JJ,
Kiasuism at its worst? Calling to find out the amount of your bonuses is really uncalled for. =p
Your bonuses and perks are indeed enticing. But if the job is causing you so much stress that renders you incapable of enjoying the additional money, then it doesn’t seem like such a worthwhile tradeoff. Not saying that there’s no stress in the public sector, though.
I am also slowly developing an aversion to spending money. A tinge of sadness when money leaves the pocket. Not sure if that’s a purely good thing. But at least, I ain’t that intimidated when spending a big amount on shares though. I get my “shopping high” there.
Good for you.
You can save up your bonus and make your money works harder for you.
Consider value investing. 🙂
Hi VI,
Thanks! Just to let you know, the article was written a few years ago and I am no longer receiving such bonuses.
As for value investing, it is notoriously difficult.