S’pore salaries to go up by 4.5% in 2014: Surveys

SINGAPORE — Local salaries are expected to increase more than inflation next year as the tight labour market will probably push employers to increase wages to attract and retain employees, according to two separate surveys on salary trends and movement in the Asia-Pacific region.

Human resources consultancy firms Towers Watson and ECA International both said employees in the Republic can expect salaries to go up by an average of 4.5 per cent next year, which is higher than the overall inflation forecast of 2 to 3 per cent for 2014.

Tower Watson’s Global Data Services Leader for Southeast Asia Sean Paul Darilay said the tightening of foreign worker policies and the government’s push to increase the pay of low-income workers will be key drivers for wage growth over the next few years.

“Companies are therefore challenged to accelerate productivity measures to offset potential increase in labour costs,” Mr Darilay said.

“Increase in productivity can be achieved by driving enhanced employee engagement, and investments in technology and business process improvements.”

The survey findings are in line with comments released last month in the Monetary Authority of Singapore’s (MAS) biannual macroeconomic review. It said labour supply constraints will intensify in the next few quarters, keeping the unemployment rate low and thereby supporting stronger wage increases.

“Overall wage growth is expected to stay above the historical average of 3.3 per cent in 2013 and 2014. Coupled with the hikes in foreign-worker levy and a modest pick-up in productivity, unit labour costs will continue to rise in the near term,” the central bank said in its review.

ECA International said retail and services are industries that are forecasting a higher increase as they are more labour-intensive, thus the need to offer higher remuneration to retain staff. Its Regional Director for Asia, Mr Lee Quane, however, noted that the projected salary increases after inflation are actually lower than this year’s.

“Projected salary increases after inflation will amount to 1.8 per cent in 2014. This is down from the 2.2 per cent real wage increases that employees in Singapore are currently experiencing,” he said, adding that employees would, therefore, feel worse off in real terms.

Both firms said Singapore is not the only country seeing a rise in wages higher than inflation rates as employers throughout the Asia-Pacific are having a harder time finding and retaining “suitably skilled staff”. Towers Watson said salaries across the region are expected to go up an average of 7 per cent, with China and Vietnam set to experience the biggest increase and Japan to see the smallest rise.

ECA shared the view that wages in China will see the biggest rise, with companies there predicting salary increases of 8 per cent next year.

“Our recent global research on buying power around the world ... suggested that Chinese executives could even be better off than their United States counterparts by 2017 if the current trends continue,” said Mr Quane.