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Civil service pay rise can have 'ripple effect' on job market, say HR experts

Civil service pay rise can have 'ripple effect' on job market, say HR experts

People seen at the central business district in Singapore on Mar 29, 2022. (Photo: CNA/Marcus Mark Ramos)

SINGAPORE: An upcoming pay rise for civil servants is in line with market conditions, and could have a knock-on effect on private-sector salaries, said human resources experts.

On Sunday (Jun 5), the Public Service Division (PSD) said that the salaries of civil servants in generic schemes will be adjusted to “keep pace with the market”.

The pay increases, scheduled for August, range from 5 per cent to 14 per cent, with higher increases for those with larger gaps with the market benchmark, and for those in lower-wage rungs.

PSD said that the civil service will also step up growth and development initiatives and introduce more flexible work arrangements to make a career in the civil service more attractive.

It highlighted that the civil service reviews its salaries to “broadly keep pace with, but not lead, the market”.

PAY RISE FOR CIVIL SERVANTS

Officers in the Management Executive Scheme (MXS), Management Support Scheme (MSS) and Corporate Support Scheme (CSS) will receive salary adjustments of between 5 per cent to 10 per cent, with higher adjustments for grades that have larger gaps with the market benchmark.

Officers in the Operations Support Scheme (OSS) will receive higher adjustments of between 6 per cent and 14 per cent. 

Alongside these adjustments, PSD has been working with the Amalgamated Union of Public Employees (AUPE) to redesign OSS officers’ jobs, improve career progression and raise productivity in the long run.

About 23,000 officers will benefit from the salary adjustments. They perform diverse roles across the civil service, ranging from policymaking to administration and operations work.

The last salary revision by the civil service was in 2014.

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Experts CNA spoke to said that there is a widespread talent crunch, with most companies finding it harder to hire and fill roles.

For every unemployed person, there were 2.11 job vacancies as of December last year, according to statistics from the Ministry of Manpower. A year before, in 2020, the same figure was just 0.76.

Ms Linda Teo, country manager of ManpowerGroup Singapore, said that the shortage of manpower and the difficulty in hiring talent with certain skill sets have pushed employers to pay more to retain and attract talent. 

“The PSD has to recalibrate its compensation package so as to remain attractive as an employer and not lose talent to the private sector,” said Ms Teo.

The wage raises also come after two years of stagnant increments and bonuses because of the pandemic and economic uncertainty, said Ms Jaya Dass, managing director for Randstad Malaysia and Singapore.

With the economy recovering and companies resuming expansion plans, there is now a “domino effect” where compensation for workers, suppressed in the past two years, is now bouncing back.

She said that she has been seeing a median of 15 to 25 per cent wage increases, with 35 to 50 per cent jumps for jobs in demand, such as in IT and life sciences. 

“What the Government has done is actually, I would say, a bare minimum for government jobs and definitely not in the front of it, to say that they are offering the most generous increments, (but) it’s at least getting them up to a level playing field with external markets,” said Ms Dass.

And this could mean further adjustments to wage levels in the market, analysts said.

Said Ms Dass: “The Government coming out and announcing it like that is definitely letting the cat out of the bag … The next domino effect would be people going out there and demanding (salary increases).

“But whether you state it or not, it's already happening in the commercial private sector.”

"RIPPLE EFFECT" ON PRIVATE SECTOR

Mr Peter Hamilton, APAC vice president and managing director at KellyOCG, said that it is possible to see a “ripple effect” on the rest of the market, forcing employers to also review their compensation and benefits in other areas.

ManpowerGroup’s Ms Teo said that this “indirectly sets a benchmark” for companies in the private sector and will affect small- and medium-sized enterprises (SMEs).

“The hike will likely hit SME companies the hardest as they have limited financial resources and usually take the lead from the government sector,” said Ms Teo. 

“Employers who are unable to meet the increased salary demands and hire the people they need might end up relocating their operations to countries with lower labour costs in order to manage their bottom line.”

The experts emphasised that pay was not the only factor here. Mr Hamilton said that besides reviewing the compensation and benefits for employees, it is important to look into employee experience, mental well-being and health. 

He said that globally, 37 per cent of employees’ expectations have changed since the pandemic, citing KellyOCG’s global Re:Work survey. 

They have higher expectations around work-life balance, flexible working arrangements, benefits and support for their wellbeing, said Mr Hamilton.

“This figure is higher in Singapore at 43 per cent, reinforcing the need for Singapore businesses to take prompt action for a more talent-centric attraction, engagement and retention strategy,” he said.
 
“Compensation aside, there could also be a higher demand or acceptance for workforce agility or flexible work arrangements.”

Singapore's Public Service Division has said that it will increase efforts to provide officers with meaningful career opportunities and support officers’ growth and development with job attachments, structured job rotations, formal training and project work. It has also introduced hybrid work arrangements and flexible work options.

Ms Dass of Randstad said that the civil service can also “take a stand” in these aspects and help set a benchmark for the private sector.

“I think there needs to be some mandated guidelines around how much flexibility companies need to offer, and also some ‘sticks’ that catch employers out for offering bad working conditions to employees,” she said.

Source: CNA/hm(ac)
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