Workers expect pay rises despite subdued outlook

PHOTO: Workers expect pay rises despite subdued outlook

Despite the lacklustre global and domestic economic situation, workers here expect their salaries to rise next year, according to a recent survey by recruitment firm Randstad.

But other reports suggest that employers are likely to give modest raises of about 4 per cent, which may not beat inflation.

Three-quarters of the 405 Singapore employees surveyed by Randstad expect pay rises next year, though they were not asked how large these should be.

This is despite projections of a subdued economic outlook, with the Government expecting growth to slow to 1 per cent to 3per cent next year.

However, workers' optimism about pay rises is in line with businesses' stable performance, said Randstad director for Singapore Michael Smith.

Almost eight in 10 bosses surveyed said their firms did well this year, despite global economic challenges. Workers whose firms are doing well "are looking to be compensated for their contribution towards this", said Mr Smith.

Industry and labour experts agreed that workers still expect pay rises despite slower growth.

But that is partly due to another aspect of the gloomy economic situation: high inflation.

"From our interactions with PMEs (professionals, managers and executives), they are not expecting huge pay rises. I think what they want is to cover inflation," said Mr Francis Lee, assistant director of the National Trades Union Congress' PME Alignment Unit.

Singapore Human Resources Institute executive director David Ang noted that inflation does not just affect individual workers' expectations, but is a factor brought up in union wage negotiations. 

Inflation is expected to be slightly more than 4.5 per cent this year, and above 3.5 per cent in 2013.

However, core inflation - which excludes private transport and accommodation costs - is likely to be just 2.5 per cent this year.

This is the number which workers will want to beat, so they might expect raises of "maybe 3per cent or so", said Mr Lee.

Surveys of companies by human resource firms suggest that this wish might well be met.

HR and financial services giants Mercer and Towers Watson both estimate that the average salary increase in Singapore for next year will be 4.5 per cent, while consulting firm Hay Group's own survey puts it at 4.4 per cent.

Association of Small and Medium Enterprises president Chan Chong Beng said that the tight labour market compels employers to raise wages, "even though the business environment is tough".

"If you are not prepared to raise your wages," Mr Chan said, "then you lose your workers to other people."

The year-end season is crucial, as workers are "waiting to see what their bonuses are before they make their next move", he added.

However, a survey by local consultants SHRI and Remuneration Data Specialists sounds a less optimistic note.

Its survey of 141 companies finds that basic wages in Singapore will rise by an average of 4 per cent next year. 

But variable bonuses are expected to fall, meaning a total wage increase of just 2.6 per cent in 2013.

With inflation expected to be higher than that, real wages are hence likely to fall, said the survey.

How much wages rise will also vary by sector, with external-oriented industries more vulnerable to global economic uncertainty.

Said Mr Ang: "If you look at the manufacturing sector, you'd be happy to just keep your job."