SINGAPORE, Dec. 11 /Xinhua-PRNewswire/ --
-- Banking, Pharmaceuticals, Consumer Goods, Aerospace and Chemical
amongst top paying sectors in 2006 on Annual Total Cash (Annual Base
Pay + Guaranteed Allowances + Variable Pay)
-- Turnover rate heightens at top management positions as the Singapore
economy gains momentum
-- Local companies found to be better pay masters than MNCs at junior
level positions
Mercer Human Resource Consulting, a global leader for trusted human
resources and related financial advice, products and services today released
its latest Total Remuneration Survey (TRS) for Singapore, a bi-annual,
market leading compensation trends report which covers more than 500
companies in Singapore across 12 industries including aerospace, banking and
finance, chemical, consumer goods, electronics manufacturing, high-tech,
life insurance, logistics, pharmaceuticals and healthcare, property, and
other industries.
The TRS report revealed several significant key trends in 2006,
including the widening of salary gaps, an increase of staff turnover at the
senior level positions, and an increase in average salary to 4.2% in 2007.
Salary will increase in 2007
2006 is a year characterized by a strong rate of growth, low
unemployment levels, and strong employment opportunities reflected in
healthy employment growth.
"Compared to 2006's 4.1% increase across the board, salaries in the New
Year will grow to 4.2 %, with the highest increases taking place in the
baking and finance sector at 4.9% and pharmaceutical and healthcare at
4.3%," Mr. Nambiar said.
High paying industries versus low paying industries
In 2006, the high paying industries are the banking, pharmaceutical,
consumer, aerospace and the chemical industry, and the low paying industries
as compared to other industries are the property, logistics and electronics
manufacturing sector. This comparison is evaluated on an analysis of the
Annual Total Cash. This trend appears to be similar with the 2005 findings.
Local companies vs. MNC: Differential in pay practice
"Mercer has noticed that there is a differential in pay practices
between MNCs and local companies," Mr. Nambiar said.
"At 'staff' levels, for annual total cash payments, the local companies
appear to be paying relatively higher than MNCs at 4.3% but the trend
reverses at 'professionals' level where local companies appear to be paying
about 4.3% lower than MNCs. The trend continues at 'management' level with
the differential being -11.6% and -18.6% at 'top management' levels."
Starting Salary
The starting salaries appear to be fairly stable over the past three
years for Masters, Degree and Diploma levels for most of the
categories/specializations.
"Mercer however is noticing trends that entry level pay packages are
increasing in specific disciplines like law, sciences, business
administration and Arts/ Social Sciences at degree level which is good news
for graduates in these disciplines."
Staff turnover, headcount and hiring intentions
Staff turnover seems to be on the rise based on study of the past few
years. The Mercer survey indicates an upward trend with turnover rates
being 5.1%, 6.2% and 7.2% over 2003, 2004 and 2005. For the first six
months of 2006, the overall turnover rate was at 6.5%. As at end of June
2006, turnover rates for Top Management and Professional categories have
already exceeded 2005's turnover rates.
A good indication of growth is actual hiring by the industry and also
the outlook to hiring. Headcount growth has increased by an average of 8.4%
across industry sectors, with aerospace and consumer goods industries
leading the pack with 18.9% and 16.3% head count growth in 2005 as compared
to the other industry sectors.
Mercer's outlook on hiring intentions also indicates about 49% of
companies increasing headcount in the third quarter of 2006.
This would indicate that there are more employment opportunities in the
market which would be one of the factors to influence the attrition rates in
organizations.
Variable Bonus
The overall variable bonus (average across all levels) seems to be
stabilizing over a three years period with 18% in 2005, 17.4% in 2006 and
18.2% in 2007 (across all staff levels in all industries) as a % of Annual
Base Salary.
The Banking and Finance sector in comparison pays a relatively higher
variable bonus as compared to other industry sectors at 26.8 %.( average
across all employee levels). This can be segmented by top management
getting 48.4% of Annual Base Salary as variable pay, 25.9% for management,
20% - 21% for professionals and 15.9% for staff.
Pay Progression and Widening Wage Gaps
Mercer compared the pay progression across different employee categories
between 2003 and 2006 and noted the trend of widening salary gaps. It was
observed that compared to the Staff level, annual base salaries of Top
Management has increased from 7 times to 8.4 times, while salaries of
Management has increased from 4 times to 4.4 times. One of the reasons for
the differential in salaries can be accounted to the presence of a notable
number of regional roles at the top management and management level which
has a relatively large scope of responsibilities than country roles and
hence larger pay.
Top Management Compensation
A comparison of pay across various Heads of Functions has shown that in
2006, 'Head of Finance' and the 'Head of Engineering' tops the list when
compared to their peers. The 'Head of Production' appears to be paid
relatively lower then the rest of the market.
Mercer's generic functions comparison reflected that the Banking and
Finance sector appear to be paying their Head of Functions in Finance, IT
and HR relatively higher in terms of Annual Total Cash as compared to Head
of Functions in other industries.
"Singapore has positioned itself as the regional headquarters for a large
number of organizations. We do notice a differential in pay between head of
function with country responsibilities as compared to regional
responsibilities. The 'Regional Heads of Functions' appear to be paid an
average 41% higher than 'Country Heads of Functions' on Annual Base
Salary. "Mr. Nambiar said.
What do the compensation trends mean for the labor market?
Given the trends that have emerged from the Mercer Total Remuneration
Survey 2006, key focus for 2007 would be attraction and retention
strategies, as turnover rates for senior management and professional levels
during the period January to June 2006 has exceeded 2005's turnover rates
coupled with the increasing opportunities available in the market today.
In addition with various 'regional' roles at senior levels;
organizations need to focus on two aspects: adequate benchmarking to ensure
competitive pay at senior levels to address the aspect of attraction and
retention, coupled with maintaining the cost of the compensation structure
to address escalating labour costs and sustenance of labor costs in the
future.
Furthermore, based on past experiences of GST increase, the impending
increase may not have a strong direct impact on compensation.
Given the strong economic growth coupled with positive growth trends
from the industries; Mercer believes companies will be under increasing
pressure to retain the right talent and the pressures on salary increase in
2007 would continue.
About Mercer Total Remuneration Survey
Mercer Human Resource Consulting's Total Remuneration Survey (TRS) is an
annual (and in some markets a bi-annual) study that covers over 800
benchmark positions in more than 60 markets around the world. Mercer Human
Resource Consulting's TRS provides companies with accurate and high quality
market data covering all forms of rewards, compensation and benefits. In
many markets, industry specific positions are also included, allowing pay
and benefit levels to be compared both locally and globally.
About Mercer Human Resources Consulting
Mercer Human Resource Consulting is the global leader for HR and related
financial advice and services, with more than 15,000 employees serving
clients in over 180 cities and 40 countries and territories worldwide. In
Asia Pacific, Mercer has 2000 employees across 31 offices in 13 markets.
The company is a wholly owned subsidiary of Marsh & McLennan Companies,
Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago,
Pacific, and London stock exchanges. For further information, please visit
www.mercerhr.com .
Contact:
Mylinh Cheung
Tel: +65-6327-3802 / +65-9007-5822
Email: mylinh.cheung@mercer.com