Higher salaries in SG in 2010.

Bigger S’pore pay packets in 2010.

Good news for those who are currently in the workforce, yes. But what about those who are still struggling to find jobs?

While companies polled in the Mercer survey were reportedly optimistic about salary increases and putting an end to salary freezes, only four in 10 said they were looking to expand headcounts again.  18 months after a major global financial crisis, and despite news of economic recoveries the world over, the fact remains that there are companies that are still retrenching staff, if you talked to enough industry players. Recovery does not mean stabilization, and we can expect to see companie failures in the midst of a somewhat cautious global economic recovery– and more people may be unemployed in 2010. [FT: US jobless claims show unexpected rise]

What most people do not understand is that it takes a while for the various economic stimulus by governments to work their magic, and it wouldn’t be surprising to see joblessness rates to rise in the interim before the economy stabilizes. Job creation is highest during periods of economic stability, not recovery.

Here’s a thought though: is this the right time to be thinking about salary increases? Or could employers have directed budgets designed for better pay packages for existing staff be better invested in job creation, or improving their existing productive capabilities, or the training of staff to ensure they are better able to value-add to their organisations?

Next, who benefits most from salary increases: the top 10% earners in the organisation, or the remaining 90%? A 3.2 per cent increment to someone earning $200,000 a year is markedly more than an employee earning $40,000 a year (i.e. $6,400 vs $1,280) and unless salary increases are structured such that the bottom earners see a larger salary increment compared to the top tier earners, it is still the top earners who benefits most.

During the crisis, many companies adopted a flat-rate salary reduction across all levels, and the reverse was true: the bottom earners felt the pinch, while for the top earners, the salary freezes didn’t make much of a difference to them based on relative purchasing power parities. Now that companies are planning to “reward” staff for their sacrifices during the crisis, it is still the top earners who stand to gain more in terms of nominal salary increases.

If prudence is the way to go as we come out of this financial crisis, I would think it is more meaningful for companies to put their budgets to better use by reinvesting in themselves and improve on their operational and productive capabilities, strengthen reserves, and perhaps create new jobs, rather than think about increasing salaries too soon.

 Related:

• Merkel: economic crisis not over yet
• Irish Times: jobless rate climbs to 12.4%
• India: All’s not well, yet

First World country,First World work terms

Reader’s reponse in today’s mypaper (14 Dec 2009)

I REFER to the letter, “Jobseekers must leave comfort zone” (my paper, Dec 11).

The writer mentioned that,as Singapore has moved from Third World to First, the mindsets of Singaporean workers
should move in tandem.

Hence, Singaporeans should not take working regular hours or high pay for granted, so that they can remain competitive relative to foreign workers.

This line of argument is mistaken.

Developed countries move towards greater work-life balance and higher standards of living.

An example would be France, which has moved towards a 35-hour work week and better benefits for mothers, with four months’ maternity leave.

To align our expectations of pay and work-life balance with those of foreign workers from Third World countries is for our society to move backwards.

Another example would be Australia, where labour policies dictate that employers must show evidence that no citizen is able to fill a vacancy before a foreigner can be hired.

In addition, certain jobs which are considered by Singapore employers to be menial, thus leading them to hire “monkeys for peanuts” (such as pump attendants, construction workers, plumbers, carpenters, postmen, cleaners and sanitation workers), are considered respectable in Australia.

This is because over there, the contribution of such workers is not measured solely in monetary terms.

Menial workers in Singapore are not well-paid as many are not academically well-qualified. Ignoring such workers’ intangible contributions and rewarding them based solely on academic qualifications is unfair.

After all, if there should come a day when office workers are all stuck at home without their access to computers for a week because of some crisis, there may well be little disruption to our daily lives.

Compare this with what could unclog sinks and toilets for a whole week.

Also, if we insist that Singaporeans should be able to compete with foreign workers by expecting less pay, longer hours and poorer work conditions, there will definitely be citizens who cannot compete, such as mothers who cannot work long hours because of family commitments, and older workers.

If a business in a First World country is not earning enough to provide decent incomes and First World working conditions for its employees, then it is not a sustainable business by First World standards.

MS ELLEN TAN