Workers in Singapore are looking at a pay rise of around 4 per cent this year and next year as the job market tightens further, say human resource experts.
People working in the service sector can expect the biggest salary increase, especially those in finance, IT and life sciences.
As businesses face the double whammy of sharper wage pressure and rising rents, economists warn that this could result in steeper consumer price rises.
"The tightening of the labour market is expected to push salaries up," said Mr Josh Goh, assistant director of corporate services at recruitment consultancy The GMP Group.
"It remains a job seeker's market as many business leaders are struggling to find the right talent to fill critical vacancies," said Mr Michael Smith, country manager at recruitment specialist Randstad Singapore.
A Singapore National Employers Federation poll of 300 firms showed that employers expect the basic wage increase this year to hover at around 4 per cent.
Its executive director Koh Juan Kiat told The Straits Times: "The tight labour market and the Government's foreign manpower policies could continue to exert pressure on wages next year as the momentum in economic and employment growth is sustained."
On Tuesday, the Monetary Authority of Singapore (MAS) said during its biannual macroeconomic review that the labour market will tighten and wage growth will be strong. It said overall wages are projected to rise by more than the historical average of 3.3 per cent annually for this year and next.
The MAS expects consumer prices to rise by 2.5 to 3 per cent this year.
"Wage growth will probably be skewed towards industries with the greatest manpower shortage and/or niche skills such as nurses, teachers and those in the financial sector," said OCBC economist Selena Ling.
Ms Stella Tang, director at speciality recruiter Robert Half in Singapore, expects a 5 per cent average pay rise for finance and accounting professionals this year.
"The unemployment rate for professionals is close to zero per cent and candidates are still getting competing job offers from different companies," she said.
Checks with 10 companies revealed that most plan to offer staff a pay rise of at least 4 per cent this year, with some resorting to sharp salary spikes to keep them.
PestBusters chief executive Thomas Fernandez expects to give his lower-wage workers a 16 to 18 per cent pay rise this year instead of the usual maximum of 5 per cent. He said: "With a tight job market, you've got no choice but to do that in order to hang on to them."
Rasel Catering plans to reward its 50 employees with a 5 to 8 per cent salary increase for this year, while the hotel Royal Plaza on Scotts has given its 366 workers a 5 per cent pay rise this year.
The upward wage pressure has already fed through to inflation, say economists, especially in the health-care and education sectors with higher pay for nurses and teaching assistants. Economists now caution that it could have a broader impact, spreading to areas such as hawker food as well.
CIMB economist Song Seng Wun said: "You could see more frequent price increases in your cup of coffee and bowl of noodles in the coming year, as labour tightness starts to bite more."
