April 1, 2020
Companies in Singapore are decreasing recruitment budget while enhancing training and development initiatives to cope with the impact of the coronavirus pandemic (COVID-19) on businesses.
This is according to Mercer’s new Pay & Bonus Pulse Survey, which provides an overview on how COVID-19 has impacted human resources budget allocation as well as salary and bonus implementation among companies in Singapore.
Compared to the budget allocated in 2019, 47% of companies surveyed are likely to reduce spending on recruitment in 2020. More than half (51%) said they will only hire for replacements this year, while another 22% are planning a hiring freeze. Only 1% are considering retrenchment.
On the other hand, some companies are also taking this opportunity to invest in their people by introducing more training and development initiatives. 12% of those surveyed are planning to increase their budget allocated in this area, and 13% are enhancing work-life balance programs to enable more flexible and adaptive work arrangements.
“With the impact of the COVID-19 outbreak on the economy, it is not surprising that manpower costs can be a key target for cuts when companies are heading into a downturn. Our survey has shown that while recruitment budgets are set to reduce, companies remain committed to protecting the livelihood of their employees. This is a reflection of the government’s stringent standards for responsible retrenchment and the impact of the job support measures introduced during the Resilience Budget,” said Kulapalee Tobing, Career Products Leader, Mercer Singapore.
The survey also looked at the impact of COVID-19 on salary increment and found that only 3% of companies in Singapore have implemented a salary cut while 5% are considering the option. However, 22% of companies are considering a reduction of increment and 11% have already done so.
Across industries, companies in the hardest-hit sectors such as real estate, construction and engineering have 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.
“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,” Kulapalee Tobing continued.
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.”
Other Key Findings
A total of 232 companies in Singapore across 12 industries took part in the survey, conducted between 9 to 15 March 2020.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.