SINGAPORE - As the Covid-19 pandemic hits businesses, 3 per cent of companies surveyed last month in Singapore have cut staff salaries while another 5 per cent are considering the option.

These companies are from industries such as manufacturing, retail and wholesale, banking, energy and technology.

Meanwhile, 11 per cent of firms have reduced their salary increment budget and another 22 per cent are considering doing so, said human resources consultancy Mercer Singapore on Wednesday (April 1).

Of the 232 companies it surveyed, 1 per cent are considering retrenchments, while 22 per cent expect to freeze hiring this year.

"With the impact of the Covid-19 outbreak on the economy, it is not surprising that manpower costs can be a key target for cuts when companies are heading into a downturn," said Mercer Singapore career products leader Kulapalee Tobing.

"While recruitment budgets are set to reduce, companies remain committed to protecting the livelihood of their employees. This is a reflection of the Government's stringent standards for responsible retrenchment and the impact of the job support measures introduced during the Resilience Budget," she said.

The National Wages Council said earlier this week when it released its annual recommendations that employers affected by the virus outbreak should first reduce non-wage costs and tap government support before looking to reduce their workers' wages. Retrenchment should be a last resort.

The Mercer survey, conducted between March 9 and March 15, found that the largest reduction in salary increment budgets is from companies in the hardest-hit sectors such as real estate, construction and engineering. The average budget for these industries is down from 4.1 per cent to 3.3 per cent.

This is followed by the transportation equipment sector (down from 4 per cent to 3.5 per cent), retail and wholesale (down from 3.5 per cent to 3.1 per cent) and logistics (down from 3.6 per cent to 3.2 per cent).

In terms of bonus payouts, 78 per cent of respondents said they have already paid out their planned bonuses, while 11 per cent have lowered their bonus budget, with the biggest cut of 1.5 percentage points coming from the retail and wholesale sector.

Some companies are also reallocating their human resources budget. Some 29 per cent out of 179 companies said they would likely reduce the proportion allocated to training and development, though another 12 per cent said they were likely to increase the proportion.

About 13 per cent said they will probably allocate more to work-life balance programmes, which Mercer said could be to enable more flexible and adaptive work arrangements.