73% of organisations unprepared for inflation aftermath

Only 27% of the surveyed organisations have coordinated measures to diffuse the effects of inflation.

According to Hay Group, of the 27%, 46% considered giving salary supplements in the form of one-time payment, account for inflation in their annual increment, increase the annual increment budget and more aggressive salary increment range.

Over 480 Singapore-based companies from both private and public sectors were polled in March 2011 for their business sentiments, insights into inflation, salary and bonus projections for the next 12 months.

Mr Victor Chan, Regional General Manager − Singapore and ASEAN, for Hay Group's Reward Information Services, said, “Although rising inflation has generated concerns with employees for the first quarter of this year, responding organisations in our poll actually reported salary increase forecast to beat the inflation rate. This is to prevent a possible repeat of 2008 when the actual salary rate of 2.3% lagged behind the inflation rate of 6.8%.

“While inflation is still a major concern for businesses, 65% of surveyed organisations are adopting the 'wait and see' approach, recognising that inflation is a fluctuating index.”

Other forms of assistance provided to employees include providing supermarket vouchers, subsidised or free meals for certain sectors, subsidised transportation, and increasing the transport allowance.

“Rising inflation will hit the lower wage workers rather than the top management level. The surveyed organisations recognise this and have responded accordingly with forms of assistance to help their employees cope,” Mr Chan said.

Salary increases
Salary increases are forecasted at 4.2% for 2011, which is 0.5% higher than was distributed in 2010. The top three sectors forecasting highest salary increases (excluding salary freezes) are FMCG (5.9%), Banking and Financial Services (4.7%) and Insurance (4.6%).

Bonus projections
The Hay Group poll showed that variable bonus (i.e. performance-based bonuses excluding annual wage supplement, contractual bonuses) ranges from an average of 2.9 months for a 12-month period. This is slightly more than the average of 2.3 months in 2010.