SINGAPORE - While a tight labour market will keep driving up pay in Singapore next year, inflation will take a big bite of the increase, according to two recent surveys.
Nominal pay hikes here are likely to average 4.5 per cent in 2014, a survey by human resources firm Towers Watson showed. Compensation specialist ECA International's survey also yielded the same number.
"Employees in Singapore are likely to feel worse off next year," said Lee Quane, regional director for Asia at ECA.
Both surveys show a real pay increase of 1.8 per cent next year, after inflation. This is lower than this year, when salaries jumped 2.2 per cent in real terms.
These findings support the view that employers are finding it harder to attract and retain talent, said Sambhav Rakyan, Towers' global data services practice leader for the Asia-Pacific.
"People may say 'it's not about the money', but the reality is that base salary is the No 1 driver for attraction and retention globally," he said.
One outcome is that more than 80 per cent of employers polled indicated that a bigger share of their salary budget's increased allocation will go to high performers in 2014, Towers said.
ECA said that Asia is expected to see the biggest real pay increases next year, despite the low pay hikes in Singapore. After inflation, pay is tipped to rise 3.2 per cent in the region, higher than the global average of 1.8 per cent.
Added Jeffrey Tang, Towers' talent and rewards director for Hong Kong: "Salary increases (in the financial services sector) continue to remain strong in the region due to several factors, such as (an) increase in demand for compliance staff to meet with the increased regulations and regional expansions of local players beyond their domestic shores."
According to ECA's survey, the pay increase in Pakistan (13 per cent) is expected to be the region's highest next year. Even with an anticipated inflation rate of 8 per cent, ECA said that workers in Pakistan were set to enjoy the second-highest "real" pay increases in Asia, after China.
Chinese workers are tipped to see their pay go up 8 per cent next year. Factoring in a projected inflation rate of 3 per cent, their real wage increase is 5 per cent.
"The ongoing need to attract and retain skilled workers who are in short supply in China is driving up wage increments there to among the highest levels in our survey," noted ECA's Mr Quane. "Over time, this trend may significantly narrow the traditional salary gap between China and Singapore."
Singapore is ranked 12th with Hong Kong in ECA's forecasts of nominal salary increase in 15 Asian economies. It is placed 33rd in the global rankings of 64 economies.
In real terms, Singapore is No 11 in the regional rankings and No 28 in the global rankings.
Japan is at the bottom of the Asian rankings in both nominal and real terms.
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