Christmas bonus might not be so rosy

Singapore - This year's salary increase has been projected to be at 3.8%, a figure 30% lower than the earlier projection of a 5.4% increase.

In a Hewitt survey conducted in October, the organisation polled 65 Singapore-based respondents to understand how the economic downturn (after the Lehman Brothers meltdown) has affected C&B packages. It then compared the findings with a similar study conducted between June to September earlier this year.

In light of the economic downturn, 63.1% of respondents say they are anticipating or have implemented changes in their salary budgets and policies. A majority (87%) say they will not cut employee pay, while another 81% say executive pay will not be cut as well. However, a small 5.6% of employees did report that it would freeze pay.

Instead, nearly three-quarters of respondents also say variable compensation payouts and budgets will be affected this year. Out of this group, 67% say variable compensation payouts will be reduced by less than 10%. 

Overall, 78% of the respondents say their change to the salary planning budgets and policies is based on concerns about the broader economy, while others (62%) cite cost reductions as a reason for change.

According to Stella Hou, Hewitt's regional practice leader for broad-based compensation in Asia Pacific, this could be the beginning of a longer-term rebalancing of salaries, following the previous years of rapid salary increases in emerging markets.

"There is a large amount of uncertainty and rapidly changing circumstances that continue to impact decision-making on a daily basis.We still see companies taking the position of 'wait and see', given this uncertainty."

However, Hou adds that companies which take care of their workforce and take effort to reward and keep top performers stand an even better chance of "mitigating the downside while positioning for the upside".