Salary increases in Singapore are rebounding to pre-pandemic levels, with increments expected to average 3.5% in 2022, compared to 3.3% in 2021 and 3.6% in 2019, according to Mercer’s 2021 Total Remuneration Survey.

The survey also saw projected overall wage increases across all 18 industries surveyed. High tech (3.9%), life sciences (3.7%) and aerospace (3.7%) are expected to see the highest salary increases in 2022, while sectors with the lowest increments are logistics (3.3%), chemicals (3.4%) and lifestyle retail (3.4%).

The consumer goods industry is forecasted to see the largest improvement, with salary increments expected to rise from 2.8% to 3.6% in 2022 as companies remain optimistic for a robust recovery in consumer spending due to pent-up demand.

Mansi Sabharwal, Reward Products Leader, Mercer, Singapore said, “Given the ongoing talent war and Singapore’s seven-year high inflation, we expect salary increments for 2022 to rise beyond the projected figure. Singapore employers are becoming more aware of the hiring and retention challenges and are actively using different ways to tackle the issue. It’s likely they will turn to financial incentives and salary adjustments to temporarily relieve the pressure.”

“While money appears to be a quick and easy solution, it is not sustainable in the long run and can lead to further wage inflation, higher people costs for employers and pressure on margins,” Sabharwal said.

Sabharwal also commented on the salary increments among industries.

“Similar to previous years, high tech continues to take the lead in salary increments primarily due to ongoing tech talent shortage as Singapore aims to become the tech capital of Asia and strengthen its digital infrastructure,” Sabharwal said. “Fierce competition for talent in the high tech sector is not only seen across senior roles, but also junior positions, resulting in a boost in starting salaries for fresh graduates.”

“Employers are now turning to fresh graduates to replace talent at lower levels in an attempt to groom and nurture them into future leaders. This is great news for fresh graduates and junior talent looking to advance their career at a faster pace,” Sabharwal said.

Business sentiment for 2022 remains positive as companies expect to increase their overall payroll budget (including merit increments, market adjustments as well as promotion increases) by 4.4% for 2022, compared to 4% in 2021 and 4.3% in 2019, the survey found.

Singapore companies are also experiencing an increase in voluntary turnover in 2021 with a projected average rate of 11.2%, nearly reaching pre-pandemic levels of 12%. The top three industries experiencing the highest turnover include consumer goods (15.1%), life sciences (14.2%) and high tech (13%).

Top reasons for voluntary turnover this year includes workers’ dissatisfaction with their compensation (66%) followed by the lack of career advancement in the organization (60%). Burnout (32%) has also made the list this year, underscoring the need for employers to focus on employee well-being.

To fill the employment gap, employers have boosted hiring in 2021 with a projected 31% increase in employee headcount.