Companies may look to increase their overall payroll budget by 4.4% for 2022, with Mercer predicting 3.5% salary increments for the city-state.
According to a study by Mercer, salary increases in Singapore may rebound to pre-pandemic levels, with increments expected to average 3.5% in 2022, a welcome increase from the actuals of 3.3% in 2021 and 3.6% in 2019.
Mercer’s 2021 Total Remuneration Survey (TRS) saw projected overall wage increases across the 181 industries surveyed. The overall payroll budget, including merit increments, market adjustments as well as promotion increases, is expected to increase by 4.4% for 2022. This was another increase from the actual 4% in 2021 and 4.3% in 2019.
Mansi Sabharwal, Reward Products Leader, Mercer, Singapore says: “Given the ongoing talent war and Singapore’s seven-year high inflation, we expect salary increments for 2022 to rise beyond the projected figure."
She added it’s likely Singapore employers will turn to financial incentives and salary adjustments to temporarily relieve the pressure on hiring and retention.
Per industry, high tech and life sciences are expected to see the highest salary increases in 2022 - 3.9% and 3.7% respectively, tying with aerospace at 3.7%. On the other hand, logistics (3.3%), chemicals (3.4%), and lifestyle Retail (3.4%) can expect the lowest increments.
It should also be noted that the consumer goods industry is forecasted to see the largest improvement from the previous year, from 2.8% to 3.6%. Companies remain optimistic for a robust recovery in consumer spending due to pent-up demand.
High tech has consistently been leading in salary increments over the past years. This is primarily due to ongoing tech talent shortage as Singapore aims to become the tech capital of Asia and strengthen its digital infrastructure.
The fierce competition for talent is not merely limited to senior positions. Competition for junior positions has resulted in a boost in starting salaries for fresh graduates. For instance, computer science engineering graduates hired by the high tech sector are getting an average starting salary of S$44,200 per annum compared to S$42,900 for the same qualification in other industries.
Employers are thus turning to fresh graduates to replace talent at lower levels in an attempt to groom and nurture them into future leaders.
However, Singapore companies are also experiencing an increase in voluntary turnover in 2021 with a projected average rate of 11.2%, nearly reaching pre-pandemic levels of 12%.
The three industries experiencing the highest turnover include consumer goods (15.1%), life sciences (14.2%), and high tech (13%).
“We’re expecting attrition rates in 2021 to extend beyond pre-pandemic levels through the end of this year and into next year as the Great Resignation momentum continues,” said Sabharwal. “Sectors like consumer goods, life sciences, and high tech continue to experience high attrition rates this year as strong demand in these sectors has resulted in greater talent mobility."
Delving deeper, the top reason for voluntary turnover this year was workers’ dissatisfaction with their compensation at 66%, followed by the lack of career advancement in the organisation at 60%. Burnout (32%) has also made the list, highlighting the need for employers to focus on employee wellbeing.
To fill the employment gap, employers have boosted hiring in 2021 with a projected 31% increase in employee headcount.
Sabharwal further noted that there were more leavers than joiners for most of the companies surveyed.
To combat high attrition rates and increased numbers of vacancies in the midst of a talent shortage, Singapore employers are utilising financial incentives to attract and retain talent. Apart from salary increments, companies are also providing referral bonuses (31%) and retention bonuses (23%). One in 10companies have also given out performance bonuses during this time.
1 These industries include High Tech, Life Sciences, Other Manufacturing, Consumer Goods, Retail & Wholesale, Chemical, Services (Non-Financial), Logistics, Real Estate & Hospitality, Energy, Transport Equipment, Other Non-Manufacturing, Banking & Financial Services, Construction, Healthcare Services, Education, Insurance & Reinsurance, and Mining & Metals
Images / Mercer