SINGAPORE – While Singapore’s economic growth is projected to moderate from next year – after a blistering rebound this year – workers here can expect even better salary increments next year compared to the past 12 months, according to a survey by human resource firm Mercer.
Yesterday, Mercer said its survey of 625 companies spread across 11 key sectors found that companies here are offering employees an average of 3.7 per cent salary increase this year. Increased demand and the need to retain key talent would lead to an even higher 4.4 per cent increase in pay packets next year, it added.
However, there is a concern among HR experts that the wage growth might not be matched by a corresponding increase in productivity levels – making it unsustainable over the longer term.
Said Right Management group executive vice-president (Asia Pacific) Ronnie Tan: "That is our concern, not so much with the salary increase, but are companies able to directly drive productivity in line with this anticipated salary increase?"
Mercer’s survey found that the bankers reported the highest salary increase of 4.2 per cent this year as the financial sector recovers from the global crisis.
The trend is expected to continue into next year with the insurance and banking industries forecasting the highest salary increases at 5.2 per cent and 5.1 per cent.
Mr Tan said the surge in remuneration in the financial sector was a "reaction from the … deep cuts that (it) had experienced" during the downturn.
Said Mr Tan: "From the effect of the global financial crisis … suddenly you see this whole upsurge in Asia-Pacific, and that is what is driving Singapore as a financial centre."
According to recruitment group Ambition, most banks have seen a marked increase in attrition throughout the year. And the salary increments are a means to retaining their staff.
Mr Paul Endacott, managing director (Singapore) for recruitment group Ambition, noted that the banking and financial services sector would likely drive the hiring demand next year. Said Mr Endacott: "Without an obvious pool of available talent, this will put upward pressure on salaries as we progress through 2011."
Overall, Mercer’s survey found that six in every 10 companies were looking to increase head count. It also recorded a rise in turnover across all industries.
The insurance industry suffered the highest turnover rate at 17.3 per cent and the chemical industry enjoyed the lowest at 8.1 per cent.
Organisations surveyed reported the sales and finance functions as being the most challenging to recruit and retain.
Casting an eye to next year, Mercer said companies need to focus more on talent management, while investing in leadership development, as well as creating a "compelling overall employee value proposition".
"Inflation can create an increased mismatch between employers’ and employees’ expectations. Heightened demand and an increased focus on talent retention will bring focus back to compensation levels," said Mr Puneet Swani, Asean business leader for Mercer’s Information Product Solutions.
A strategy purely based on attractive compensation would not be sustainable, he added.