Salaries to increase by 3.2% in 2010

The average salary increase is forecasted to be 3.2 percent in 2010, up from 1.9 percent in 2009, according to a survey by Mercer.

"As companies start to see the signs of economic recovery in Singapore, they are becoming more positive about the year ahead. As such, significantly less organizations plan to freeze salaries in 2010, compared with this time last year,” said Puneet Swani, ASEAN business leader for Mercer’s information product solutions. He continued, “While this year’s challenging economic conditions drove 35 percent of employers to freeze salaries in 2009, just 15 percent are planning to do so in 2010.”

Mr. Swani further stressed that organizations will have to make some tough decision over the coming months. While employee expectations have increased for 2010, salary increase budgets might not have increased to the same degree. As such, companies will need to allocate their limited budgets in more visibly differentiated ways to retain their top performers.

According to Mercer’s Total Remuneration Survey, there was also greater differentiation in salary increases across industries in 2009. The pharmaceutical industry reported the highest level of increase at 4.1 percent, followed by consumer goods and aerospace at 3.4 percent and 2.8 percent, respectively. Conversely, the real estate, electronics manufacturing and banking industries had the lowest increases at 1.5 percent or less. This also includes companies which had salary freezes.

With regards to hiring, four out of 10 participants say they are looking to add headcount over the next 12 months. Less than five percent plan to reduce headcount, while the remainder plan to maintain the same headcount as last year.

The industries with the highest voluntary turnover rate include high-tech (14.8 percent) followed by broadcasting (13.8 percent) and banking (13.5 percent). The electronics manufacturing industry experienced the most retrenchment (6.2 percent).