Wage rises to lag inflation: Survey

Wage rises to lag inflation: Survey

 

Tuesday • May 20, 2008

 

If you haven’t done so already, it is time to tighten your belt for tougher times ahead.

 

Salary increments in Singapore for the next 12 months will lag inflation, according to the results of a survey by global management consultancy Hay Group released at the weekend.

 

Despite inflation hitting a record high of 6.6 per cent in the first quarter of this year, most employers will be maintaining the same percentage increment in wages as the previous year (see table), the survey showed.

 

Of the 250 Singapore-based companies from both the private and public sectors polled, 75 per cent said they would factor inflation into salary reviews over the next 12 months.

 

But the overall real wage — in other words, the wage adjusted for inflation — and ultimately the disposable income, would still have shrunken across the workforce by between 1 and 2 per cent if inflation averages 6 per cent, the Hay Group said.

 

The gap between wages and inflation would widen further if prices of energy and food continue to rise to new record levels.

 

The price of international benchmark crude oil rose to a new record of US$127.82 a barrel last week, boosted by demand from the booming Chinese economy and ahead of the summer driving season in the Northern Hemisphere.

 

Meanwhile, the price of rice — the food staple for half the world –— has nearly doubled over the past year.

 

On Friday, the National Wages Council (NWC) called on employers to help workers, especially those who earn lower wages, by giving them a one-off bonus to cope with consumer prices, which have risen to their highest in 26 years.

 

The Government has accepted the NWC guidelines — which apply to all public- and private-sector employees.

 

But the guidelines are non-binding and “not all employers will necessarily follow this recommendation”, Citigroup’s chief economist Kit Wei Zheng said.

 

Source: Today Newspaper

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