Singapore salaries seen to surge 4.4% in 2011

Banking industry is back in 2010 with the highest salary increases among all industries surveyed as higher rate of turnover reported across industries, compared to last year.

Salary data shows upward trend
In response to a steadily growing economy, increased demand and the need to retain key talent, companies across industries in Singapore are offering employees an average of 3.7 percent salary increase in 2010, report findings derived from Mercer's Total Remuneration Survey 2010. These companies forecast an average salary increase of 4.4 percent in 2011, a figure that comes close to pre-crisis levels.

These survey findings include the responses of 625 Singapore-based companies, surveyed over the month of August 2010. These companies represent eleven key industries/sectors. Nearly 70 percent are multi nationals.

From this year's survey, 97 percent of respondents forecasted salary increases in 2011. The proportion of companies who gave salary increases in 2010 and 2009 were 84 percent and 56 percent respectively. While nearly 40 percent of the organisations surveyed reported a salary freeze in 2009, only 16 percent reported so in 2010. None of the survey respondents reported plans to implement a salary freeze in 2011. Four out of ten companies surveyed were looking at higher rates of salary increase in 2011 than in 2010, while only one in ten companies reported a lower forecast for 2011 compared to 2010.

The pharmaceutical industry reported the highest salary increase in 2009 (4.1 percent). However with the financial sector recovering, the banking industry made a comeback in 2010 with the highest salary increase (4.2 percent) among all industries surveyed. This trend looks set to continue into 2011, with the insurance and banking industries forecasting the highest salary increases in 2011 at 5.2 percent and 5.1 percent respectively.

Recruitment underway across some industries
In 2009, Mercer's Total Remuneration Survey reported that nearly six out of ten companies in Singapore were looking at maintaining the same level of headcount, with only three out of ten looking at increasing headcount. With clear signs of economic recovery and increase in demand, the situation has reversed this year with six in every ten companies looking to increase head count.

Rise in turnover across all industries
Turnover rates are up from 9.8 percent in 2009 to 12.4 percent* across all industries in 2010. The insurance industry suffered the highest turnover rate at 17.3% and the chemical industry enjoyed the lowest at 8.1%. Organizations surveyed reported the sales and finance functions as being the most challenging to recruit and retain.

Key challenges for HR moving forward
Commenting on the way forward for HR as 2011 approaches, Puneet Swani, ASEAN Business Leader for Mercer's Information Product Solutions, comments on the key issues organizations must focus on in order to achieve sustainable growth: "Inflation can create an increased mismatch between employers' and employees' expectations. Heightened demand and an increased focus on talent retention will bring focus back to compensation levels". He emphasized, however, that a strategy based solely on attractive compensation is far from being sustainable.

"Companies must deploy other reward elements in order to reap better returns on their investment in the long run. Companies need to ensure more focus on talent management including talent segmentation, while investing in leadership development, as well as creating a compelling overall employee value proposition" said Mr Swani.