SINGAPORE employees can expect a hefty 5 per cent pay rise this year, on average, according to a new survey, up from 4.5 per cent last year.
However, a rising inflation rate could mean their real spending power barely changes, despite the rise.
The survey, carried out by human resources organisation ECA International, is based on data collected and analysed over the last six months from human resources (HR) professionals in 250 multinational companies worldwide.
The increase, which is considered high for a developed economy such as Singapore’s, is due to the Republic’s robust growth last year and a ‘relatively tight labour market, which looking into 2008 shows little sign of changing’, said ECA’s Hong Kong-based general manager, Mr Lee Quane.
Most other developed economies, he said, are expected to post wage rises of about 4 per cent.
Hong Kong, for instance, is looking at a 4 per cent growth rate, the same rate it has seen in the two previous years.
Globally, Asian workers are tipped to be getting the highest salary increments of 7.3 per cent, on average, while those in Western Europe are enjoying the lowest at 3.9 per cent. Globally, the average is 5.9 per cent.
But employees should not celebrate just yet. In terms of real wages, it is a different story.
A real wage increase is the difference between the salary increase and inflation, which is the rate at which prices for necessities such as food and accommodation rise.
Many HR departments, said Mr Quane, base their salary increment calculations on historical inflation rates.
He noted, too, an unwillingness on the part of companies in developed Asian cities to raise wages, which reflects a constant pressure on keeping costs low.
Inflation in Singapore hit a 16-year high of 3.6 per cent last October, before rising further to 4.2 per cent in November, the fastest rate of price increase since 1982.
The current bout of inflation, said Mr Quane, has blindsided many HR professionals.
So while ‘companies expect to pay 5 per cent more, they may have to revise this, to take into account the rising inflation rates’, he said.
Source: The Straits Times 18 Jan 08