Salaries will go up again next year, but the shortage of talent is forcing companies to resort to other incentives to retain staff, a survey noted yesterday.
It found that the overall salary increase projected for next year is 3.7 per cent, up slightly from 3.6 per cent this year.
"Faced with the possibility that this alone may be insufficient to (retain) employees, companies are turning to other incentives in addition to salary increments," said global consultancy firm Mercer, which compiled the annual survey.
It also showed that firms here are increasingly using retention bonuses to keep talent, with one in three companies doing so this year, compared with one in four in 2017.
This trend correlates with hiring from outside becoming increasingly expensive, Mercer noted.
Companies are paying 10.6 per cent more for executive candidates and 11.6 per cent more for management candidates if they join at the same level, said Mercer.
This premium could be up to 14.4 per cent and 15.3 per cent, respectively, if the candidate is joining at a higher level, it added.
Overall salary increase projected for next year, up slightly from 3.6 per cent this year.
How much more companies are paying for executive candidates if they join at the same level.
How much more companies are paying for management candidates if they join at the same level.
"The key findings of our survey show that the acceleration of change and disruption across industries and businesses is having a flow-on effect on the way companies are approaching their market competitiveness from an employee perspective, particularly as talent pools are shrinking," said Ms Kulapalee Tobing, Mercer's career products leader for Singapore.
Around 1,000 companies from 19 sectors participated in the survey, which identified key salary trends and predictions for hiring and pay for the year ahead.
Consumer goods, lifestyle retail and life sciences recorded small upward swings in salary increases compared with this year.
Voluntary turnover rates were projected to drop or remain the same, with those of the chemical and aerospace industries projected to be as low as 8.2 per cent.
"There needs to be a shift from developing isolated reward initiatives towards more holistic talent strategies that acknowledge pay as only one means of differentiation and motivation," said Ms Tobing.