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53% of S’poreans Feel They’re Underpaid for The Work They Do

2023-04-27 , 2:37 pm

Last Updated on 2023-05-05 , 4:42 pm

In March 2023, news about Evergreen, a Taiwanese company that rewarded its employees with almost a year’s salary as a mid-year bonus, left many Singaporeans like us envious.

Similarly, in April 2023, an unnamed company in Shenzhen, China, rewarded one lucky employee with a year’s worth of paid leave at its annual dinner, causing further envy among Singaporean workers.

These reports of better employment conditions abroad may explain why a survey by Randstad Singapore in 2023 found that 53% of Singaporeans believe their current salaries do not accurately reflect their work contributions.

Interestingly, despite this sentiment, 42% of respondents reported receiving a salary increase from their employers at the time of the survey.

Perhaps it’s time to consider job opportunities in China?

Large Bulk of Singaporeans Feel Underpaid

A study conducted by Automatic Data Processing Inc. (ADP) across the Asia Pacific region, including India, China, and Australia, found that only Singaporean workers prioritised salary, with 69% placing it at the top, followed by job security at 41%.

The report also revealed that 48% of Singaporean workers expect to receive a bonus in 2023.

Similarly, Randstad’s survey reflected the same sentiment, with many Singaporeans feeling undervalued for their efforts at work and expecting higher salaries.

Ms Yvonne Teo, Vice President of HR, APAC, ADP, suggested that Singapore’s high cost of living may have exacerbated these expectations.

Inflation has caused an increase in the prices of many commodities, impacting lower and middle-class earners more severely than high earners.

Just last year, in 2022, Singapore tied with New York to share the “honour” of being the most expensive city to live in.

It was also the eighth time within a decade that Singapore had ranked first due to our consistently high standard of living.

As such, many employees here demand a higher salary to keep up with these ever-rising costs.

Employees Leaving As Salary Expectations Are Not Met

Companies have also been forced to cut costs due to the volatile global economic landscape and inflation caused by the COVID-19 pandemic.

However, they are now expected to prioritise compensating talent as economic conditions have been recovering to pre-pandemic levels.

With the rising global talent shortage, companies can no longer afford to tighten their belts in this area.

According to a report by ManpowerGroup, 77% of employers find filling roles challenging, marking a 17-year high since 2006.

This situation could worsen if companies fail to offer salaries that meet candidate expectations, potentially leading to a loss of talent.

In fact, Randstad’s survey found that 35% of respondents changed employers between March 2022 and February 2023 due to a mismatch in salary expectations.

Additionally, employees who felt their annual salary increment didn’t align with the challenging economic landscape caused by recent inflation also sought higher-paying jobs to cover their expenses and achieve their financial goals.

Guidelines Set In Place to Maintain Salary Standards

To combat employee dissatisfaction, the National Wages Council (NWC) released guidelines in 2022 calling on employers to increase employee salaries.

These guidelines aimed to alleviate the financial struggles caused by inflation and reduce the income gap between lower-wage and higher-wage workers.

The guidelines suggest that employers with good business prospects and who performed well should reward their staff with built-in wage increases and variable payments that align with their contributions.

Companies that hire lower-wage workers should give their employees a pay rise at the upper band of 5.5% to 7.5% of their gross monthly wage, or at least $80 to $100.

The NWC acknowledged that businesses had faced rising costs and uncertain business prospects due to various economic fluctuations in recent years.

However, they emphasised that companies should still reward employees with variable payments.

Therefore, employers who have done well but face uncertain business prospects may moderate built-in wage increases while rewarding employees for their contributions.

More Employees Negotiating for Higher Pay

These guidelines were probably set for good reason as respondents from Randstad’s survey stated they often left their previous jobs to look for jobs or employers that could give them better benefits or salaries.

According to Randstad Singapore, among the respondents who changed employers, 37% reported receiving an average salary increase of more than 20%.

Job seekers reported asking for a 20% increase as this was the typical starting point for salary negotiations.

However, some reported being more willing to lower their expectations if other demands, such as flexible work arrangements, medical insurance, career development and advancement opportunities, and a positive work environment, can be met.

As a result, almost 20% of the job-hoppers accepted a new job in 2022 with less than a 5% salary increase.

Some Employees Did Not Receive Bonuses

Despite the guidelines set by the NWC, 22% of Singaporeans who responded to Randstad’s survey said they did not receive bonuses for their work contributions in 2022.

This may have been due to factors such as the war in Ukraine and the inflation caused by the COVID-19 pandemic.

Many businesses, and even the Government, have been affected by the economic downturn and have had to freeze or reduce salary increases and bonuses.

Furthermore, in 2022, a prominent Asian internet giant, Sea Ltd, had to freeze salaries for most of their staff and pay out lower bonuses due to the worsening global economic environment.

The company also cut jobs and reduced expenses to improve profitability after a difficult year in 2022 that saw a 77% loss in value and the closure of its e-commerce operations in various markets.

Fair Salary and Pay Increments Needed to Keep Talents

Despite the economic challenges, saving on costs by denying employees competitive pay or bonuses for their work contributions may prove detrimental to companies.

To most workers, a bonus is essential for motivation, particularly towards those who have agreed to lower base salaries.

The absence of a bonus can make it difficult for individuals to meet their financial goals or cope with increasing living costs.

According to Randstad, 37% of 55% of respondents who received bonuses in 2022 received only one or less than one month’s worth of bonus.

45% received a bonus equivalent to two to three months of salary.

When asked about salary increments, 31% of respondents said they were informed that their salary would not increase for a while, while 42% reported receiving a salary raise.

Of those who received a raise, half received less than a 5% increase.

Despite this, the year-end bonus has proven crucial in determining whether employees will stay with a company.

In January 2023, 74% of 1,123 working Singaporeans intended to leave their jobs after receiving bonuses that did not meet their expectations.

As such, companies are encouraged to offer reasonable pay increments to reward and motivate employees despite economic difficulties.

Bonuses can also effectively attract and retain talent, as job seekers always look for employers who provide competitive compensation packages.

Among the respondents who received a bonus in 2022, 80% reported satisfaction, and 65% indicated that they would remain with their current employer for at least six months after receiving the year-end bonus.