Salary increments on the rebound to pre-pandemic levels, says Mercer

 

  • Average salary increments in Singapore in 2022 expected to reach 3.5% compared to 3.3% in 2021 and 3.6% in 2019.
  • Overall payroll budget increases predicted to average 4.4% in 2022 compared to 4% in 2021.
  • Sectors including High Tech (3.9%), Life Sciences (3.7%) and Aerospace (3.7%), are expected to see the highest salary increases in 2022.

 

Singapore, November 17, 2021 –Salary increases in Singapore are rebounding to pre-pandemic levels, with increments expected to average 3.5% in 2022, compared to 3.3% in 2021 and 3.6% in 2019. Mercer’s 2021 Total Remuneration Survey (TRS) also saw projected overall wage increases across all 18 industries1 surveyed.

 

Business sentiment for 2022 remains positive as companies expect to increase their overall payroll budget (including merit increments, market adjustments as well as promotion increases) by 4.4% for 2022, compared to 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. Singapore employers are becoming more aware of the hiring and retention challenges and are actively using different ways to tackle the issue. It’s likely they will turn to financial incentives and salary adjustments to temporarily relieve the pressure.”

 

“While money appears to be a quick and easy solution, it is not sustainable in the long run and can lead to further wage inflation, higher people costs for employers and pressure on margins.”

 

Mercer’s flagship annual compensation and benefits benchmarking study, the TRS identifies key remuneration trends and predictions for hiring and pay for the year ahead. This year, 961 companies participated in Mercer’s Singapore survey. 

 

Salaries to rise across all industries

 

Across industries surveyed, High Tech (3.9%), Life Sciences (3.7%) and Aerospace (3.7%) are expected to see the highest salary increases in 2022, while sectors with the lowest increments are Logistics (3.3%), Chemicals (3.4%) and Lifestyle Retail (3.4%).

 

The Consumer Goods industry is forecasted to see the largest improvement, with salary increments expected to rise from 2.8% to 3.6% in 2022 as companies remain optimistic for a robust recovery in consumer spending due to pent-up demand.

 

“Similar to previous years, High Tech continues to take the lead in salary increments primarily due to ongoing tech talent shortage as Singapore aims to become the tech capital of Asia and strengthen its digital infrastructure. Fierce competition for talent in the High Tech sector is not only seen across senior roles, but also junior positions, resulting 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 SGD 44,200 per annum compared to SGD 42,900 for same qualification in other industries,” says Ms Sabharwal.

 

“Employers are now turning to fresh graduates to replace talent at lower levels in an attempt to groom and nurture them into future leaders. This is great news for fresh graduates and junior talent looking to advance their career at a faster pace.”

 

Using compensation as a means to combat high voluntary attrition and hiring

 

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 top 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,” says Ms Sabharwal.

 

“Sectors like Consumer Goods, Life Sciences and High Tech continue to experience high attrition rates this year as strong demand in these sectors have resulted in greater talent mobility.”

 

Top reasons for voluntary turnover this year includes workers’ dissatisfaction with their compensation (66%) followed by the lack of career advancement in the organization (60%). Burnout (32%) has also made the list this year, underscoring the need for employers to focus on employee well-being.

 

To fill the employment gap, employers have boosted hiring in 2021 with a projected 31% increase in employee headcount.

 

Ms Sabharwal comments, “As of now, there are more leavers than joiners for most of the companies surveyed. There is still a significant gap to fill and the gap will continue to grow until border restrictions are lifted and the economy re-opens. Employers will then have a larger talent pool to tap on.”

 

To combat high attrition rates and increased numbers of vacancies in the midst of a talent shortage, Singapore employers have turned to financial incentives to attract and retain talent. Apart from salary increments, companies are also providing referral bonuses (31%) and retention bonuses (23%). One in 10 companies have also given out performance bonuses during this time.

 

Reset rewards strategy with a focus on skills

With the Great Resignation comes the Great Reset. Many organizations are shifting their focus to skills-based strategies in a bid to gain a competitive edge in by attracting, developing and retaining critical skills for sustainable success in the future.

 

According to the survey, nearly seven in 10 companies have identified new skills needed to operate in the post-pandemic world. However, only 13% of surveyed companies have started on the pay for skills journey.

 

Ms Sabharwal says, “Critical skills such as technical, communication and problem-solving skills are beginning to overshadow education or experience as more companies implement skills-based pay practices to attract new talent. What is concerning is that that less than half of the companies link rewards to the continued development of skills after they have on-boarded their new hires. It’s important that employers consistently focus on skills throughout the entire employee journey and rewards need to be an integral part of that conversation.

 

As employers relook at their organization’s rewards strategies, they should consider a play on different compensation elements such as pay segmentation, collaboration incentives as well as innovative benefits and wellbeing solutions.”

 

1 Mercer’s Total Remuneration Survey (TRS) was conducted across 18 industries including 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

 


About Mercer

 

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 81,000 colleagues and annual revenue of over $19 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.

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