Pay hike… got meh?

Singapore January 18th, 2008

Employees in Singapore can look forward to a 5% increase in wages in 2008, according to some survey that was conducted (and I hope they were not from SPH). However, it was also foreseen that this 5% will not go a long way in increasing the spending power of the Singaporean due to the high inflation rate that Singapore is going through. This may not even cover the GST increase given the roll over effects of goods and services. In addition, many goods and services saw sky high hikes due to the increase in fuel costs. Of course, there is the occasional opportunist that doesn’t make this any easier.

As a result, this increase may be hardly felt – which means that the average Singaporean may still find himself having about the same amount left for himself after paying for his usual spending. At the end of the day, it’s still the usual demand/supply forces that pushes a worker’s salary higher. Such forces can be seen in highly competitive markets such as finance, IT and communications. If you are not in an area which is in demand, I think you can jolly well forget about the 5% too.

WAGES are set to increase in the year ahead, but inflation may curb the purchasing power of your fatter paycheque, according to a survey on salary trends.

ECA International’s Salary Trends Survey 2007/2008 showed that the average Singapore worker can expect his salary to increase by 5 per cent this year — a figure that would be just on par with the inflation rate predicted by some economists last week.

This means that in real terms, there may be no wage increase at all.

"For a developed economy such as Singapore, this level of wage increase is high," said Mr Lee Quane, general manager of human resource membership firm ECA International, which conducted the survey. The survey polled about 250 multinational corporations (MNCs) in 47 countries.

"But we have had high inflation which is going to undermine our purchasing power throughout 2008," he added.

The picture is not all bleak, however.

Mr Quane explained that the expected 5-per-cent increase is deduced from companies using the base salaries of their workers. It excludes performance-related pay and other bonuses typically paid to managerial staff, which would have boosted the percentage increase.

Effects of the credit crunch in the United States are also not expected to be widely felt, according to another survey by recruitment firm Hudson.

Only 8 per cent of respondents felt it would affect their hiring plans negatively, said the Hudson survey, which polled 659 employment decision-makers from various MNCs here.

Half the employers surveyed also plan to increase salaries by 10 to 20 per cent to attract new staff. One in five employers said they planned to pay 21 to 30 per cent more.

While the banking and finance, and IT and telecommunications sectors are offering the biggest pay increases, they are also the ones seeing the highest percentage of staff being poached in a tight labour market.

"Employers are paying big increases in salaries and bonuses to attract and retain talented candidates but still face rising turnover rates," Mr Mark Sparrow, Hudson’s Singapore country manager said.

Wage increases are reflective of a country’s economic growth as well as its rate of inflation, said ECA’s Mr Quane.

For example, the fact that wage increases in many Asian economies are overtaking Eastern Europe’s is a sign that growth in the latter is stabilising.
Singapore’s expected wage increase is lower than that of its fast-developing Asian counterparts like India and Vietnam, which have expected wage increases of 14 and 10 per cent, respectively.

However, it fares well compared to developed economies like those in Japan (3 per cent) and Western Europe (3.9 per cent).

Article obtained from todayonline.com on 18th January 2008



Reader's Comments

Leave a Comment

%d bloggers like this: