How SMRT's revamped wage scheme could hurt 2013 earnings

Incremental cost is a whopping ~S$25m.

Today, SMRT announced its Wage Review for all Non-Executive Staff. Non-executives include staff such as the maintenance crew, station staff, admin clerks, etc. This review excludes Bus Captains who have already received a salary increase last year.

According to Nomura, the incremental cost of the Revision to the group is ~S$10mn for 4QFY13, as stated by the company. The one-off payout is ~S$5mn, while the base salary revision is ~S$5mn too. This excludes possible adjustments under the Government’s proposed Wage Credit Scheme.

Based on this set of assumptions, Nomura estimates the incremental cost for FY14F to be ~S$25mn.

Here's more:

This has yet to take into account potentially higher payout under the productivity and performance incentive scheme vis-à-vis the current bonus structure.

This figure excludes possible adjustment under the Government’s proposed Wage Credit Scheme. Assuming that subsidy under the Wage Credit Scheme applies, the incremental cost in FY14F should be ~S$15mn, which is in excess of 10% of FY14F earnings.

All figures cited are based on current estimated headcount and have not factored in an expansion of the workforce.

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