To cope with the impact of COVID-19 on businesses, companies in Singapore are reducing recruitment spend, while stepping up training and development initiatives.
According to Mercer’s new Pay & Bonus Pulse Survey, compared to the budget allocated in 2019, 47% of companies surveyed were likely to reduce spending on recruitment in 2020.
More than half (51%) said they will only hire for replacements this year, while another 22% were planning a hiring freeze. On the bright side, only 1% were considering retrenchment.
At the same time, some companies were also taking this opportunity to invest in their people by introducing more training and development initiatives. About one in 10 (12%) were planning to increase their budget allocated in this area.
Additionally, 13% are enhancing work-life balance programs to enable more flexible and adaptive work arrangements.
This is in accordance with the recent Tripartite Advisory shared by the Ministry of Manpower which reiterates to employers that retrenchment is always the last resort. The advisory also urged employers to implement a Flexible Work Schedule (FWS) and focus on training and upskilling.
When it comes to salaries, only 3% of companies in Singapore have implemented a salary cut while 5% were considering the option. At the same time, 22% were considering a reduction of increment and 11% have already done so.
Companies in the hardest-hit sectors such as real estate, construction and engineering indicated the largest reduction in salary increment by 0.8%, from an average of 4.1% to 3.3%. This is followed by the transportation equipment sector at 0.5% (4.0% to 3.5%) and retail and wholesale (3.5% to 3.1%) and logistics (3.6% to 3.2%) at 0.4% each.
Other key findings on the salary front included:
- Salary increments: More than half (59%) of companies have already given out their salary increments to employees. Of the remaining companies who have not implemented their increments, 8% have decided to delay or are considering delaying their increment cycle by three months, while 7% have indicated a salary freeze. The remaining companies were adopting a wait-and-see approach as they have payout cycles later in the year.
- Variable bonuses: Results are similar for variable bonus, with 78% of companies already given out their planned bonuses. Only 11% have revised down their budget, from the average variable bonus of 15.8% to 14.5%.
- Bonus budget revisions: The retail and wholesale sector has experienced the highest bonus budget revision of 1.5%, from 9.5% to 8.0%. This is followed by real estate, construction and engineering companies at 1.1% (15.5% to 14.4%). Companies in sectors such as healthcare, medical or educational institutions, public services and professional services have revised down their bonus budget by 0.9% (from 16.4% to 15.5%).
- Adjustments to sales incentives: Looking at the adjustments of incentives for sales teams, only 10% of companies surveyed have modified, or are modifying their sales incentive plans. Most companies (34%) said the adjustments will be made based on sales target, followed by threshold (18%) and commission ratio (12%).
Kulapalee Tobing, Career Products Leader, Mercer Singapore, said: “Given the fluidity of the COVID-19 outbreak, it is not surprising that most companies are adopting a wait and see approach for any future salary and bonus payouts. While the current outlook remains positive, any escalation of the situation could further impact business decisions and dampen the pay and reward of employees, especially across sectors that are worst hit by the outbreak."
Peta Latimer, CEO, Mercer Singapore, concluded that there remains opportunities for employers to strengthen their culture in this situation: “Employee-centric measures such as enhanced training and flexible health and wellness initiatives can put companies in a better position ahead of recovery. Listening to employee concerns and providing support during these challenging times is a good way to build loyalty and goodwill, and we have an opportunity to drive collaboration and creativity with the introduction of split team arrangements and adaptive working. Seeing and taking advantages of such opportunities will pay dividends when business demand returns.”
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