Pay growth to return to pre-Covid levels as economy recovers

Pay could rise by an average of 3.5%, and up to 35% for niche roles, say watchers; talent crunch worsened by border closures during pandemic

Nov 18, 2021

SINGAPORE salaries are headed for a rebound in 2022, as employers play catch-up in the recovery from the pandemic-induced economic downturn.

Pay could go up by an average of 3.5 per cent, going by the findings of recent polls that were released separately by professional services firm Mercer and employee services provider ECA International.

Recruitment firm Randstad has similarly projected internal salary increments of 3 per cent to 5 per cent. Job hoppers could find themselves taking home 10 per cent to 20 per cent more - or even a premium of as high as 35 per cent for specialists in niche roles, Randstad added.

Mansi Sabharwal, reward products leader at Mercer, told The Business Times: "The 2022 forecast is for higher salary increments than in 2021... The overall salary increment reflects companies' confidence in Singapore's economy and outlook for 2022."

Jaya Dass, managing director for Randstad Singapore and Malaysia, attributed the generous remuneration on offer to a talent shortage, especially in industries such as technology, manufacturing and logistics.

Similarly, Kirsty Hulston, regional director at recruitment firm Hays Singapore, reported "a gap between the rising demand and talent available, which might impact salaries".

Even as technology, digital and sales positions drive salary raises, Nilay Khandelwal, managing director of recruiter Michael Page Singapore, said "we are also seeing higher than normal increments as professionals move" in finance, procurement, supply chain and marketing roles".

Indeed, Mercer's data showed the largest increment of 3.9 per cent in the high-tech sector, which includes semiconductor production and digital infrastructure.

Those in aerospace and life sciences can expect above-average raises of 3.7 per cent, followed by banking and finance at 3.6 per cent.

Even entry-level staff are feeling the uplift, with Mercer remarking that computer science engineering graduates joining the high-tech sector have an average annual starting salary of S$44,200 - against S$42,900 for the same qualification in other industries.

The overall 3.5 per cent average increase is a pick-up from the 3.1 per cent increment in 2021, and on a par with the raise in 2020, Mercer said.

Sabharwal also noted room for an upside to the forecast, on the back of "the ongoing talent war and Singapore's seven-year high inflation".

And, even when the effects of inflation are taken into account, ECA projected a real salary increase of 2.0 per cent in Singapore - beating both the Asia-Pacific average of 1.9 per cent and the global average of 0.9 per cent.

Khandelwal told BT that the increments his firm has seen are already higher than usual: Job hoppers who could have expected 10 per cent to 15 per cent more in the past are now looking at raises of 20 per cent to 25 per cent, and counter-offers are gaining prominence as a way to retain outgoing professionals, he said.

The talent crunch - and the higher pay baiting those still in the market - was exacerbated by border closures during the pandemic.

Singapore's population shrank by 4.1 per cent year on year to 5.45 million as of June, on lower foreign worker numbers - including an 11 per cent fall in Employment Pass holders.

Hays' Hulston singled out demand for local contractors - citizens and permanent residents - with niche tech skills as an ongoing market trend.

Randstad's Dass said: "Singapore's diminishing population reported this year had raised issues about the capacity of the workforce and the size of the talent pool to meet companies' growing ambitions....

"The restrictions on work-visa approvals and the focus on getting locals employed first means that the war for talent will continue."

Michael Page's Khandelwal is holding out for a normalisation of the situation in the next 6 to 12 months, as borders reopen - that is, "instead of one professional having three or four job offers, we get to a state where that individual has one or two offers".

But a war for talent would still continue, he added: "The Singapore market has been holding back on hiring activity last year and (firms) are all ramping up employment right now."

Wage growth will also be underpinned by a bounce-back in the Singapore economy - especially sectors that ailed during the pandemic.

"Salaries have stayed rather consistent in 2021 compared to the previous year, with slight shrinkage in some sectors due to the impact of the pandemic... Moving into 2022, we're seeing these salaries recover as the situation stabilises," said Hulston.

Sabharwal pointed to a recovery in the real estate sector as households upgrade and long-term investors return to the market, and Khandelwal said that "the hospitality and airline industries, which have been challenged for the longest period of time, can look towards some optimism".

In general, Mercer's survey of more than 960 companies found that employers expect to up their payroll budget - which includes bonuses, promotions and market adjustments - by 4.4 per cent in 2022, against 4 per cent in 2021 and 4.3 per cent in 2019.

Said Dass of Randstad: "There will likely be a floodgate effect from the resurgence of hiring, growth and talent shortage as companies begin to grow their headcount and recoup from the last two years. Talent will expect to be compensated fairly and catch up on their losses."