Singapore – Singaporean workers will not be getting large pay increments in the next 12 months, despite the record high 6.6% inflation rate.
A recent survey by Hay group showed the inflation will have negligible effect on salary movements as employers from the top to middle-tier of the market are planning to maintain the same percentage increment as the previous year, at 6% and 5% respectively.
However if inflation continues to average at 6%, the overall real wage, such as the wage adjusted for inflation and the disposable income, would still have shrunken across the workforce by about 1% to 2%
Only employees from the bottom 25% of the market will be getting an increased wage increment of an addition 0.8% from 4% last year to 4.8% this year. Because the bottom 25% typically represent companies that do not compensate well, Hay Group says the added increment is an effort by companies to catch up with market rates.
With the looming salary freeze and rising inflation costs, companies need to reassure employees that they remain valuable to the organisation without damaging the core of business operations.
Andrew How, general manager of Hay Group Singapore, said, “It would serve organisations well to have an unwavering focus on people during these periods.”
To retain talent and control costs, How suggested companies adopt a varied compensation structure that rewards the top 10% and key talent while keeping pace with the inflationary trend.
Companies should also use this downturn period to keep employees engaged and motivated, while maintaining the performance required to weather the storm, as it would strengthen their employer of choice branding.
How says, “Tough times create the opportunity for change, and the best organisations are able to re-energise employees around a shared objective.”