We had, in January 2012 provided some guidelines on annual wage increments for the year beginning 2012 (see here). In our earlier recommendation, we had proposed a salary adjustment of about 2.5%, and recommended that employers consider a mid year adjustment when the economic situation became clearer.
The Monetary Authority of Singapore (MAS) has recently (13 Apr 2012) released new inflation figures for Singapore. According to the MAS, headline CPI inflation will average 3.5 to 4.5 per cent in 2012, while core inflation is projected to average 2.5 to 3.0 per cent. This is about 1% higher that the forecast at the beginning of the year.
Our recommendations for salary adjustments remain unchanged – that is:
- offer a 2.5% salary adjustment to employees at the beginning of the year;
- introduce a higher variable bonus that is pegged to performance of the company;
- introduce more performance-driven incentives; and
- allow for a mid-year adjustment of salaries after the economic situation becomes clearer.
Untimately, the quantum of increase should be linked to the performance of the Company, and the productivity of the workforce. Given the relatively fluid economic situation, it may be better in the near term to increase the variable component and reward performance through higher bonuses and incentives.
Do contact us for additional information and advise regarding pay for performance systems.