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Employees could see smaller pay raises next year in Singapore

SINGAPORE — Higher inflation figures will result in smaller pay raises in real terms for employees in Singapore next year, according to a recent salary trends survey by ECA Internationa.

Taking into account the 1.8 per cent increase in inflation rates next year, real wage increase for Singapore employees is expected to be at 2.2 per cent, down from this year’s 4 per cent, said ECA International today (Nov 12), citing the results of its latest Salary Trends survey.

The forcasted wage increase is also lower than the expected Asian average of 3.1 per cent.

ECA’s Salary Trends Survey reports current and projected salary increases for local employees. It provides information on real pay rises by factoring in inflation rates. This year, it collected information from 336 multinational companies across 70 countries and regions. More than 159 companies provided data on their Singapore-based staff.

The survey ranked Singapore was 12th across Asia and 20th globally for projected real wage increase next year.

“The Singapore economy will clearly be affected by the slowdown in emerging markets, owing to its relationship with major economies in the Asean region and China,” said ECA International Regional Director – Asia Lee Quane. “However, salaries will increase this year and next year at the same rate as in recent years when economic growth has been more stable. This suggests that the rates of salary increase that we see in 2015 and 2016 are what companies consider necessary to retain their human capital.”

In Asia and globally, Vietnam was ranked first with a forecasted 7 per cent real wage increase next year, while China was ranked second with an expected 6.2 per cent increase and Pakistan took third spot.

“Despite its recent slowdown, China remains among the fastest-growing economies in the world with well-developed supply chains and cheap labour making it the primary destination for foreign investment in the developing world,” said ECA.
In Malaysia, “one of the countries most affected by emerging market volatility in recent years”, companies are predicting that salaries will rise at “an even slower pace in 2016”, added ECA.

According to company predictions from around the globe, wages will rise 5.1 per cent on average next year, slightly up on this year’s 5 per cent average. After factoring in inflation, the global average for real wage increase is forecasted to be 1.7 per cent, which is similar to last year’s average of 1.5 per cent.