With a majority of Singaporeans unhappy with their salary, it is no surprise that higher salary is among the top priorities for the nation's job seekers -and it seems like employers are getting the hint.
According to Willis Towers Watson’s 2016 Asia Pacific Salary Budget Planning Report, employees in Singapore are set to see an overall growth of 4.0% in their salaries in 2017.
After taking into account the projected inflation of 0.8%, Singaporean employees are likely to see a salary increase of 3.2% in real terms.
By industry, the highest projected salary increase of 2017 can be seen in the insurance (4.5%), consumer products (4.4%), media (4.4%), pharmaceutical and health sciences (4.4%), leisure and hospitality (4.4%), consumer product retail (4.3%), and retail (4.2%) industries.
On the other end of the spectrum, the lowest projected increase are from the banking (3%), and energy and natural resources (3.5%) industries.
Across the straits in Malaysia, overall projected growth is a relatively high 5.5%, however, once projected inflation of 2.4% is taken into account, the salary increase in real terms is pegged at 3.1% - slightly lower than that of Singapore.
While overall growth in Hong Kong and Singapore are both projected at 4.0%, Hong Kong sees a much higher inflation forecast (2.3%) than that of Singapore (0.8%), setting salary increases in real terms to be much lower in Hong Kong (1.7%) than Singapore (3.2%).
Across Asia Pacific, salaries are projected to rise 5.9% in 2017, up a fraction from 5.8% in 2016. This reflected broader downward pressure on salary increase budgets in the region, as employers seek to keep costs down amid slowing economic growth.
The report pointed out that while salaries were projected to rise 6.4% in 2016, in reality the increase was just 5.8% - the first time below 6% since 2012.
"If that pattern continues in 2017, actual increases will be well below the 5.9% forecast by the companies surveyed. It will also mark the third year in a row that salary increase budgets have declined," the report stated.
The findings show that once average inflation for Asia Pacific of 3% is taken into account, the projected increase in real terms for 2017 will be 2.9%, down from 3.5% in 2016.
The highest salary increases in 2017 will be in Pakistan (10.2%), Bangladesh (10%) and India (10%), though in real terms growth will be 5% for Pakistan, 4.2% for Bangladesh and 4.3% for India.
In East Asia and South East Asia, before inflation is factored in, Vietnam will see the highest base salary increases at 9.6%, followed by Indonesia (9.0%), and China (7.0%), while Japan will have the smallest (2.3%).
“We are seeing lower salary increase budgets across much of the region,” said Sambhav Rakyan, data services practice leader, Asia Pacific, at Willis Towers Watson.
“Back around 2012 and 2013, companies in Asia pumped a lot of money into their salary budgets and drove salaries up, but they didn’t see the revenues rise in tandem, so it made such increases unsustainable. Now these companies are being much more prudent,” he said.
The report also pointed out that due to tighter budgets, organisations are very discernibly prioritising their top performers.
Of the allocated budget for salary increase in 2016, 37.6% went to the top performers, 33.7% was shared by above average performers while average performers shared the remaining 29.2% of the budget.
Rakyan added that, as the available budget shrinks, companies need to be smarter about how they use them to retain talent. “It’s important to prioritise the best performers and also to review how employees are rewarded with other incentives, such as more attractive benefits,” he said.
Rakyan added: “The data clearly shows a greater emphasis on rewarding high performers rather than across-the-board increases for all. Without such differentiation, companies will face pressure in attracting and retaining talent, especially for in-demand areas, such as sales and digital roles.”
“Employers have to think beyond inflationlinking and look at more nuanced factors such as affordability, growth expectations, both employee and company performance, and specific talent and skills needs,” he said.
Maggy Fang, head of talent and rewards, Asia Pacific, at Willis Towers Watson, said: “It is important for companies to improve transparency in their communications with employees about salary increases. Then, even if they don’t like the outcome, employees will at least understand the rationale behind it. Our experience is that they appreciate this.”
“Nowadays people are looking for other options besides a standard annual pay rise. Employees are looking at how and when their performance is rated, and also for more flexibility in their benefits packages. Therefore companies need to adopt a more holistic approach and consider total rewards factors such as career development opportunities, recognitions, ongoing communications, and flexible working arrangements,” Fang added.
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