Pay Increase hit 9 year high!

Nov 28, 2007

Pay increases hit 9-year high
Median salaries rose 7.7% this year, a leap from last year's 1.6%

AFTER graduating from the National University of Singapore last year, Ms Ann Koh drifted from one advertising job to another, and made between $1,500 and $2,000.
In May, the Arts graduate seized the chance to join a media company and scored a pay rise of nearly 80 per cent.

Ms Koh's experience is typical of many others in a bumper year for job seekers, where a booming economy and a labour crunch have pushed the median salary for full-timers up to $2,330.

That figure marks a record 7.7 per cent increase in pay from June 2006 to June this year. It is the highest jump seen since the roughly 8 per cent rise from 1997 to 1998. The numbers dwarf the pay increases of recent years. The median salary rose only about 1.6 per cent annually between 2004 and last year. Between 1998 and 2004, the increase was about 1.2 per cent per year.

This latest set of robust numbers comes from a Ministry of Manpower (MOM) report released yesterday. The report focuses on Singaporeans and permanent residents in the workforce.

The rosy picture that emerged from the report was largely expected by economists and human resource experts.

In fact, Mr Paul Heng of NeXt Career Consulting was expecting the increase to be even higher.

'Even if you told me it was 9 per cent, I wouldn't be surprised,' he said.

'I think everyone knows it's been a good year for the economy.'

The rise did catch the attention of others such as economist Chua Hak Bin, but not for all positive reasons.

Dr Chua is concerned that the high pay does not appear to match how much work people are doing.

'What's disturbing me is that labour productivity is not increasing at the same pace,' he told The Straits Times.

Labour productivity is a measure of a worker's output. If a worker produces less than what he is paid for, then it means higher costs for the company.

Dr Chua pointed to another earlier employment report from the MOM which showed that labour productivity has only inched up over the same period that pay has skyrocketed. What is worse is that for the last quarter of last year and the first quarter of this year, productivity fell 0.7 per cent and 1.3 per cent respectively. That means, said Dr Chua, 'that the companies are feeling the wage increase'.

Mr Anthony Peck, general manager of human resource training consultancy HRSingapore, has a similar worry.

'The salary they are paying to attract talent now is more than the actual value of the job. That is not just bad for the employer, but it also means if the economy goes bad, the employee is going to have his pay cut,' he said.

Other figures in the MOM report also gave much to cheer about.

As wages rose, the number of low-wage workers dropped. The number of full-time workers making $1,200 between June last year and this year dropped by 6.6 per cent in that year.
There were also record numbers of women and older workers in the workforce - a sign that all the efforts to draw them back are beginning to bear fruit.

Some 56.2 per cent of residents aged 55 to 64 were working as of June this year. Over the same period, the number of women in the prime working age of 25 to 49 in the workforce went up 1.1 points to 70.8 per cent.

Together, they pushed the overall employment rate to 62.6 per cent, the highest level since 1991, when such data was first recorded.

As bright as the picture is now though, Mr Peck does not expect the purple patch to last.

'I personally don't think these numbers can be sustained. I think we will see the economy start to slow down in the first two quarters of next year.'