<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Pay hikes won't keep up with inflation
</TR><!-- headline one : end --><TR>Projected 1.5% median salary rise is lowest in 13 years of Hay surveys </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Michelle Tay
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SALARIES in Singapore will tend to rise by less than the inflation rate this year - so real wages will actually shrink.
According to a survey by global consulting firm Hay Group, the median salary increase here for the next 12 months is projected to be 1.5 per cent.
This is the lowest rise in 13 years - since Hay Group's first survey in 1997 - said the firm, which surveyed 300 Singapore-based companies in both the private and public sectors in March.
With inflation hovering at 1.6 per cent, the firm said disposable income would ultimately still have shrunk by the end of the year.
Companies polled in the survey said salary increases would be 'preferentially given' to lower-level employees to help them cope with inflation.
Hay Group said this was 'a measure of the times'.
In April last year, before the financial crisis took hold, the firm had forecast a salary increase of 5.4 per cent for this year. This was revised down to 3.4 per cent in December last year.
The survey also found that 43 per cent of the companies polled are planning to freeze salaries, including promotion increments, for the next 12 months; while 21 per cent said that they will be deferring salary increases in the next 12 months.
Mr Christian Vo Phuoc, Hay Group's country manager for reward information services, said: 'Just one year ago, we were experiencing high inflation and employers were looking at one-off adjustments to help employees cope. Now the situation is reversed where employees are asked to do more with less to help their employers cope with the downturn.'
Even performance-based bonuses may not be entirely safe in this climate.
Hay Group's survey found that median variable bonuses have dropped by 54 per cent year-on-year, from 2.8 months in the first quarter of last year to 1.3 months in the first quarter of this year.
One-fifth of the companies polled are planning to freeze bonus payments, while another 37 per cent are adopting a 'wait-and-see' attitude by deferring bonus payouts for the next 12 months.
Last month, another consultancy, Hewitt Associates, found in its survey of 53 Singapore companies, also conducted in March, that the average annual salary increment projected for this year is a slightly higher 2.1 per cent.
Hewitt said employees in senior management positions will be the most affected in the coming months, as their salaries are expected to rise by just 1.9 per cent this year, compared with an increase of 5.1 per cent last year.
And when the firm's next survey rolls around next month, these figures 'will most likely fall even further', said Mr Samir Bedi, Hewitt Singapore's practice leader of compensation consulting.
Mr Vo Phuoc said salary budgets are now the smaller part of the talent management equation, and companies need to wield whatever money they have to generate better returns by stringently tying pay to performance and business strategy.
Meanwhile, Hewitt's study found that amid the cost-cutting, companies appear to be doing their best to keep jobs - even if it means downgrading.
Companies are targeting to cut variable bonuses by an average of 9 per cent from last year, in an effort to manage the bottom line and retain their workforce.
About a third of the companies (38.8 per cent) are also downgrading the travel class on airlines.
Said Mr Bedi: 'Companies are sacrificing comfort by cutting costs in those areas rather than sacrificing talent.
'The endeavour is to cut costs to save jobs and not to cut jobs to save costs.' [email protected]
</TR><!-- headline one : end --><TR>Projected 1.5% median salary rise is lowest in 13 years of Hay surveys </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Michelle Tay
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->SALARIES in Singapore will tend to rise by less than the inflation rate this year - so real wages will actually shrink.
According to a survey by global consulting firm Hay Group, the median salary increase here for the next 12 months is projected to be 1.5 per cent.
This is the lowest rise in 13 years - since Hay Group's first survey in 1997 - said the firm, which surveyed 300 Singapore-based companies in both the private and public sectors in March.
With inflation hovering at 1.6 per cent, the firm said disposable income would ultimately still have shrunk by the end of the year.
Companies polled in the survey said salary increases would be 'preferentially given' to lower-level employees to help them cope with inflation.
Hay Group said this was 'a measure of the times'.
In April last year, before the financial crisis took hold, the firm had forecast a salary increase of 5.4 per cent for this year. This was revised down to 3.4 per cent in December last year.
The survey also found that 43 per cent of the companies polled are planning to freeze salaries, including promotion increments, for the next 12 months; while 21 per cent said that they will be deferring salary increases in the next 12 months.
Mr Christian Vo Phuoc, Hay Group's country manager for reward information services, said: 'Just one year ago, we were experiencing high inflation and employers were looking at one-off adjustments to help employees cope. Now the situation is reversed where employees are asked to do more with less to help their employers cope with the downturn.'
Even performance-based bonuses may not be entirely safe in this climate.
Hay Group's survey found that median variable bonuses have dropped by 54 per cent year-on-year, from 2.8 months in the first quarter of last year to 1.3 months in the first quarter of this year.
One-fifth of the companies polled are planning to freeze bonus payments, while another 37 per cent are adopting a 'wait-and-see' attitude by deferring bonus payouts for the next 12 months.
Last month, another consultancy, Hewitt Associates, found in its survey of 53 Singapore companies, also conducted in March, that the average annual salary increment projected for this year is a slightly higher 2.1 per cent.
Hewitt said employees in senior management positions will be the most affected in the coming months, as their salaries are expected to rise by just 1.9 per cent this year, compared with an increase of 5.1 per cent last year.
And when the firm's next survey rolls around next month, these figures 'will most likely fall even further', said Mr Samir Bedi, Hewitt Singapore's practice leader of compensation consulting.
Mr Vo Phuoc said salary budgets are now the smaller part of the talent management equation, and companies need to wield whatever money they have to generate better returns by stringently tying pay to performance and business strategy.
Meanwhile, Hewitt's study found that amid the cost-cutting, companies appear to be doing their best to keep jobs - even if it means downgrading.
Companies are targeting to cut variable bonuses by an average of 9 per cent from last year, in an effort to manage the bottom line and retain their workforce.
About a third of the companies (38.8 per cent) are also downgrading the travel class on airlines.
Said Mr Bedi: 'Companies are sacrificing comfort by cutting costs in those areas rather than sacrificing talent.
'The endeavour is to cut costs to save jobs and not to cut jobs to save costs.' [email protected]
