Cautiously optimistic - that is what observers are saying about the next round of recommendations to be released by the National Wages Council (NWC).
Salary increments are expected to be around three to four per cent. But experts said workers should manage their expectations.
The signs of a rebound are all there, with a higher GDP forecast of between 4.5 and 6.5 per cent for 2010, higher tourism numbers and employment gains of 2.2 per cent in 2009.
This is in stark contrast to the economic situation in June last year when the National Wages Council last issued its guidelines.
In a rare move last year, the council issued fresh guidelines mid-term, reflecting the fluidity in the economy. It called for measures like wage cuts and shorter work weeks to help businesses save costs.
With the turnaround in the economy, the question is - will the guidelines this time round be less conservative?
Experts said companies should reward their workers for swallowing the bitter pill by restoring pay, but only for those which can afford to. That is because there is still a lot of uncertainty about how the second half of the year will pan out.
Executive vice president of Asia Pacific at Right Managament, Ronnie Tan, said: "Most businesses are looking at the second half of the year from a global perspective, particularly in the US, how the situation is going to be like.
"I think the larger economies seem positive, but until consumers start spending, the real solid recovery is going to be a question of timing."
Peter Lee, managing consultant at Remuneration Data Specialists added: "Companies doing well will be asked to reward their staff by restoring wage cuts, pay a sustainable wage increase and pay extras in the form of bonuses rather than hefty built-in increases."
Increments are also on the cards, but it will unlikely be broad-based as the NWC is expected to continue urging companies to raise the variable component of wages.
Fermin Diez, partner, Mercer, said: "What it means to an employee's point of view is that more pay is at risk and less pay is certain as a percentage.
"So let's say you're going to get a five per cent increase which includes restoring, it may be that you don't get the full five per cent in salary but what you get is maybe two or 2.5 per cent in salary and the rest goes into your bonus. But you have to earn the bonus.
"The employees don't necessarily like this idea and in fact they will rather much have base salary than none because inflation is still going up and if I get some salary increase below inflation, I'm still not keeping up with the cost of living, particularly if I was one of 2 or 3 who either got their salary either frozen or cut."
Companies will also need to grapple with the implications of restoring pay.
Mr Fermin Diez added: "If you restore, you have to make up two years. It's two years of wage increases - because restoring assumes you (had) cut (wages) and about a third of the companies in Singapore (had done that).
"About another third froze (salaries) which means another third still increased. There were wage increases during 2009. There are new wage increases for 2010 so anybody that cut or froze has to restore it and provide twice as much."
Talent retention will remain an issue as the job market picks up. Experts said companies should look into retention programmes that go beyond pay, which includes leadership effectiveness and engagement with employees.
Ronnie Tan, executive VP, Asia Pacific, Right Management, said: "Employers have to look beyond just money. Companies have to look at what would keep employees engaged.
"What would keep employee's engaged comes form several areas. The most direct area is in terms of leadership effectiveness in the company - the type of leaders people work for. People say that they join a company, but they leave the leader.
"The second part is in terms of a big push in career development and growth. If you look at companies now, we are looking at a multi generational workforce and people are having different expectations of their jobs.
"Organisations have to start getting much more innovative and creative in terms of how they would retain these performers other than just using money.
"A more stable workforce will certainly be a good thing for productivity. As people start to stay in their jobs a while longer, productivity - coming up from familiarity in the job - will definitely fill the uptake.
"If turnover starts to pick up again and we see a lot of job hopping around, there is going to be a negative productivity impact."
The NWC is expected to issue its latest guidelines in the middle of this year.
- Channel News Asia
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