Globally 2020 was a year like no other and despite managing COVID extremely well Singapore was not spared from the economic impact of this virus. Sectors very important to the economy were affected including travel, tourism, oil and gas and retail shopping. From the moment news of the ‘Grand Hyatt Cluster’ broke it was clear daily life and business in Singapore was going to be disrupted. Hotels across the Island City have had more quarantine customers since then than actual guests on holiday or business travel.
Through four extraordinary budgets (Unity, Resilience, Solidarity & Fortitude) the Singapore government has however done a remarkable job supporting many impacted businesses and individuals up until this point. Now as we look forward to the second half of 2021 are those businesses and the economy ready to rebound back and what does it mean for workers and their compensation and benefits?
From an economic viewpoint we know that COVID discriminated globally based on sector. Working/Schooling from home and reduced socialising accelerated the growth and profitability of many tech companies and that showed in the pay with good bonuses and amazing share growth for Executives with company share plans. In other industries it was a different story – as global travel slowed and the oil price plummeted big oil and gas companies looked to cut costs by freezing pay and reducing workforce. Singapore followed this trend and there were have and have nots in terms of pay for 2020 depending on sector however many Singaporeans were likely spared from workforce reductions due to government support through those earlier mentioned budgets.
As we look forward to the remainder of 2021 we can expect annual salary budgets of 3-4% on average for Singapore with higher increases in those sectors where revenues will be strong such as pharma, health, high tech and lower in the industries still subdued such as energy, financial services and tourism. We would expect pay to continue to rise at a faster pace for Singapore grads and junior employees with in demand skills as tightening of work pass requirements for foreigners take effect.
Singapore appears to be even more popular than ever for highly skilled, experienced foreigners from Western countries and that is no surprise. The way Singapore has managed COVID along with the climate, lifestyle and tax rate make it a destination of choice for Executives, many of whom would not have enjoyed the past year living in cities such as London, New York and Paris where COVID has had a much bigger impact. As in the past if they move with a high salary then getting a work pass should not be a problem. However foreigners seeking internships, entry level jobs or even trailing spouses looking for work will not find it so easy due to the recently announced changes and the economic downturn.
With the vaccinations being rolled out and continued stimulus packages in developed economies we expect the second half of 2021 to be strong for the global economy and Singapore having weathered the storm should be well placed to benefit from that. For that reason we do expect rate of investments in workers to resume an upward trend towards the end of 2021 and in to 2022. On average budgets will have declined from ’19 to ’20 to ’21 but unless there are new shocks (COVID or otherwise) it is unlikely that trend can continue in to 2022. In fact average salary budgets of greater than 4% would not be surprising in 2022 as the battle for talent resumes in the post COVID world.
Do remember to check out our consultancy page if you do need specific help with compensation and benefits solutions for your Singapore business/employees.