SINGAPORE — Despite the uncertain global economic outlook, salaries in the Republic will still rise next year, although the increases are likely to lag behind that of other Asia-Pacific countries, according to a survey by recruitment consultancy Willas Towers Watson (WLTW) released on Tuesday (Oct 4).

Singapore, along with Hong Kong, is set to see a 4 per cent rise in salaries — compared to an average of 5.9 per cent across the region, the report added.

However, when the inflation forecast is factored in, the increase in real terms for salaries in Singapore is expected to be 3.2 per cent, compared to 1.7 per cent in Hong Kong.

Among the Asia-Pacific countries, wages in Pakistan will see the highest surge at 10.2 per cent, followed closely by Bangladesh and India with a 10 per cent rise each.

Vietnam’s salaries will grow by 9.6 per cent, Indonesia 9 per cent and China 7 per cent, before inflation is factored in.

At the other end of the spectrum, Japan will see the smallest increases in salaries at 2.3 per cent, the survey said.

Salaries in Asia-Pacific had been projected to rise 6.4 per cent this year, but in reality it rose just 5.8 per cent — the first time since 2012 it fell below the 6 per cent mark, it added.

Given tighter budgets, the WLTW report noted that organisations “discernibly prioritise” top performers — rewarding 37.6 of its salary increase budget to such employees.

Commenting on the figures, Mr Sambhav Rakyan, data services practice leader at WLTW in Asia-Pacific, said the “lower salary increases” could largely be due to companies being “much more prudent”.

He explained: “Back around 2012 and 2013, companies in Asia pumped a lot of money into their salary budgets and drove salaries up, but they didn’t see the revenues rise in tandem, so it made such increases unsustainable.”

Going forward, companies need to be “smarter” in managing their shrinking available budgets to retain talent — such as helping to “prioritise the best performers” and reviewing how employees can be rewarded in other ways, such as more attractive benefits, Mr Rakyan said.

He noted that when it comes to rewarding employees, employers now look at more “nuanced factors” — beyond just inflation-linking factors — such as affordability, growth expectations, both employee and company performance, and specific talent and skills needs.

Ms Maggy Fang, head of talent and rewards at WLTW in Asia-Pacific, added that companies should rethink whether annual base salary increases are the best way to reward employees.

She said: “Employees are looking at how and when their performance is rated, and also for more flexibility in their benefits packages. Therefore, companies need to adopt a more holistic approach and consider total rewards factors such as career development opportunities, recognition, ongoing communications and flexible working arrangements.”

The WLTW survey is designed to guide employers in their annual salary forecasting for the year ahead. The survey, which collected 4,000 responses from companies across 22 markets in the region in July, covered various industries such as technology, financial services, pharmaceutical and health sciences, chemical, energy and natural resources.