SG salary to bounce back: 3 recruitment trends and tactics to attract talent

Salary increases in Singapore are expected to return to pre-pandemic levels, with an average 3.5% increase in 2022, compared to 3.3% in 2021 and 3.6% in 2019. Mercer’s 2021 Total Remuneration Survey also projected overall wage increases across all 18 industries surveyed - high tech, life sciences, consumer goods, retail and wholesale, banking and financial services, and healthcare services, among others. This comes as companies plan to increase their overall payroll budget by 4.4% in 2022, exceeding pre-pandemic levels (4.3% in 2019). This year saw a 4% increase in the overall payroll budget. 

Mansi Sabharwal, reward products leader, Mercer, Singapore added that the ongoing talent war, coupled with Singapore’s seven-year high inflation had a part to play as well. "Singapore employers are becoming more aware of the hiring and retention challenges and are actively using different ways to tackle the issue. It’s likely they will turn to financial incentives and salary adjustments to temporarily relieve the pressure. While money appears to be a quick and easy solution, it is not sustainable in the long run and can lead to further wage inflation, higher people costs for employers and pressure on margins," she said.

Based on its survey of 961 companies in Singapore, Mercer identified key remuneration trends and predictions for hiring and pay in the market for 2022.

1. Salaries to rise across all industries

The consumer goods industry is expected to have the largest improvement in salary increments by over 1%, from 2.8% in 2021 to 3.6% in 2022, as companies expect consumer spending to spike due to pent-up demand.

Additionally, high tech (3.9%), life sciences (3.7%) and aerospace (3.7%) industries will see the highest salary increases in 2022, while logistics (3.3%), chemicals (3.4%) and lifestyle retail (3.4%) industries will receive the lowest increments - though by a margin of less than 1%. Sabharwal attributes this to the ongoing shortage in tech talent in Singapore, as the market aims to become the tech capital of Asia and strengthen its digital infrastructure.

"Fierce competition for talent in the high tech industry is not only seen across senior roles but also junior positions, resulting in a boost in starting salaries for fresh graduates. For instance, computer science engineering graduates hired by the industry are getting an average starting salary of SG$44,200 per annum, compared to SG$42,900 for those with the same qualification but in other industries,” she added.

The survey also forecasts that employers will turn to fresh graduates to replace talent at lower levels in an attempt to groom and nurture them into leadership positions, which becomes ideal for fresh graduates and junior talent looking to advance their career at a faster pace.

2. Offering compensations to combat high turnover rates

Despite the rebound in increments, Singapore companies are experiencing an average turnover rate of 11.2%, nearly reaching pre-pandemic levels (2019) of 12%. Consumer goods (15.1%), life sciences (14.2%) and high tech (13%) industries are experiencing the highest turnover rates this year as demand for talent in these industries has led to greater talent mobility. According to the survey, turnover rates are expected to surpass pre-pandemic levels through to the next year as Singapore as the Great Resignation momentum continues.

Among the reasons cited for leaving include workers’ dissatisfaction with their compensation (66%), lack of career advancement in the organisation (60%), and burnout (32%). To fill the employment gap, employers have boosted hiring in 2021 with a projected 31% increase in employee headcount.

Singapore employers have also turned to financial incentives to attract and retain talent, the survey finds. Apart from salary increments, 31% of companies in Singapore are providing referral bonuses, and 23% are offering retention bonuses. About 10% of companies have also given out performance bonuses to combat high turnover rates and increased numbers of vacancies amidst a talent shortage.

Sabharwal said that even then, there is still a significant gap to fill and the gap will continue to grow until border restrictions are lifted and the economy re-opens; providing employers with a larger talent pool to tap on.

3. Reset rewards strategy with a focus on skills

The survey also revealed that while close to 70% of companies have identified new skills needed to operate in the post-pandemic world, only 13% have adopted skills-based pay practices. Many organisations have shifted their focus to skills-based strategies in a bid to gain a competitive edge. While technical, communication and problem-solving skills begin to overshadow education or experience in the workforce, less than half of the companies link rewards to the continued development of skills after they have onboarded their new hires.

Sabharwal said, "It’s important that employers consistently focus on skills throughout the entire employee journey and rewards need to be an integral part of that conversation. As employers relook at their organisation’s rewards strategies, they should consider a play on different compensation elements such as pay segmentation, collaboration incentives as well as innovative benefits and wellbeing solutions."

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Photo courtesy: 123RF

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