A survey released on Tuesday revealed that salary increments in Singapore will surpass pre-Covid levels, but inflation will eat into real wages.
It is expected that Singapore’s average pay rise in 2023 will reach 3.75 percent, higher than the 3.65 percent seen in 2022, and the 3.6 percent seen in 2019. Over 1,000 companies from 18 industries participated in the annual survey conducted by consultancy firm, Mercer.
It was found that the logistics industry offered the highest pay rises, followed by banking and finance, and high technology. Conversely, the real estate sector offered the lowest salary increases. Among the results of the study are remuneration trends and potential hiring and compensation trends for next year.
“Logistics has taken the lead in salary increments, primarily due to the return of international trade flows and supply chains post-pandemic, and the accelerated growth of e-commerce activities that boosted demand for shipping and delivery,” said Mansi Sabharwal, reward products leader for Mercer Singapore.
“We are also expecting overall pay increase budgets to reach as high as 5 percent of total payroll cost in 2023, surpassing the pre-pandemic level of 4.7 percent. This suggests companies are willing to spend more, offering not only higher annual merit increments but also mid-year promotions as well as market adjustments.”
Due to Singapore’s heightened inflation, employees’ real wages are expected to fall by 2.95 percent in 2022. While there has been a negative real salary increase, only 22 percent of Singaporean organizations are increasing salary budgets to fight inflation, while nearly half have no plans to make further changes.
A majority of the companies in the poll will wait-and-see regarding inflation in their 2023 salary increase budgets, because it is expected to fall in 2023.
Many employers are not interested in increasing wages to match inflation and instead are looking for less permanent solutions, like benchmarking competitors, to stay competitive, noted Sabharwal.