Slow economic growth set to dampen pay hikes, bonuses

Tech firms are likely to offer the biggest salary hikes in 2016, while companies in the banking and financial sector are expected to be more cautious.
Tech firms are likely to offer the biggest salary hikes in 2016, while companies in the banking and financial sector are expected to be more cautious.PHOTO: AFP

Tech firms likely to give biggest raises next year, while financial sector will be more cautious: Recruitment firms

Slow economic growth will put a cap on pay increases in most industries next year.

Tech firms are likely to offer the biggest salary hikes in 2016, while companies in the banking and financial sector are expected to be more cautious, recruitment firms said in response to queries from The Straits Times.

Their comments come after a Manpower Ministry labour report released on Tuesday showed employment growth this year has fallen to levels last seen in 2009 in the wake of the global financial crisis.

The Singapore economy is tipped to grow between 1 per cent and 3 per cent next year, according to official forecasts. This muted pace comes amid uncertainties over the strength of the economic recovery in the United States and Europe, even as China's slowing economy continues to weigh on the region.

BONUSES OF A MONTH OR LESS

In our talks with employers, most of them indicated they will give out bonuses of one month or less and pay increases of less than 3 per cent. Some had indicated that they would not be giving any (pay) increments.

MS LINDA TEO, country manager of ManpowerGroup Singapore

Recruitment agencies said lacklustre business growth will hold companies back from giving significant pay rises next year.

"In our talks with employers, most of them indicated they will give out bonuses of one month or less and pay increases of less than 3 per cent," said Ms Linda Teo, country manager of ManpowerGroup Singapore. "Some had indicated that they would not be giving any (pay) increments."

Mr Toby Fowlston, managing director of Robert Walters South- east Asia, agreed that salaries are not expected to rise significantly next year.

However, he noted that job movers in niche industries could see pay hikes of 10 per cent to 20 per cent. For instance, the tech industry will be recruiting actively, and there will be new job opportunities, particularly in cyber security and e-commerce. Many companies are also beefing up IT infrastructure and support, he added.

Ms Teo said workers in essential services - such as engineers for new services in the transport sector - might also see larger pay increases.

Meanwhile, "the banking sector will continue to experience difficulties, feeling the impact of further cost cutting and increased offshoring", said Mr Fowlston.

Employers are taking a more conservative approach, not just towards pay hikes, but also hiring new permanent staff, said Mr Foo See Yang, acting country general manager of Kelly Services Singapore.

"Companies are exploring other options, including temporary and contract hiring in place of positions that were previously on a permanent basis," he said.

This comes as China's economic slowdown and regional currency volatility continue to dampen business sentiment, he added.

A version of this article appeared in the print edition of The Straits Times on December 19, 2015, with the headline 'Slow economic growth set to dampen pay hikes, bonuses'. Print Edition | Subscribe