SINGAPORE companies are under pressure to raise their wages more than they earlier expected, in view of higher inflation next year, said human resources services company Hewitt.

Companies had budgeted for a 5 per cent wage hike next year, according to Hewitt's latest survey of 180 companies in Singapore across sectors like hospitality, energy, retail and logistics.

Of these companies, 11 per cent were Singapore-based and the rest are international ones. Almost half of the 180 companies are units of US-based companies.

But the survey, which was conducted in April and May, does not reflect the most recent data which suggest that inflation may reach 4 to 5 per cent early next year as prices of food, oil and commodities climb.

If companies keep to their budgetted figures, real wage increases may be a measly 0.5 per cent to 1 per cent, at least during the early part of next year.

This may trigger a fresh round of musical chairs for junior and middle managers, especially in the talent-strapped high-growth sectors such as financial services, said Ms Tan Yee Deng, who heads the Hewitt Associates Rewards and Analytics Practice for Singapore and Malaysia.

These employees, who have typically worked two to five years and earn $3,000 to $5,000, will be hardest hit by escalating costs of living, she said at a Hewitt survey.

'These people are the most likely to move to other jobs which offer much higher pay hikes than 5 per cent. So we may see turnover rates much higher than 8 per cent for these positions in the first half of the year,' said Ms Tan.

In the last few years, real wage increases among Singapore companies averaged about 3 per cent and tracked gross domestic product (GDP) growth and inflation quite closely.

But next year, with the spectre of a United States economic slowdown that may drag down Singapore's GDP growth, companies here are in a quandry.

They need to push wages up to retain talent in a tight labour market, while at the same time, keep a lid on business costs as the economy slows.

A senior executive of a US-based multinational electronics company said that the firm may have to 'revise the wage budget to address concerns about rising inflation.'

Retaining talent was the key factor pushing some Singapore companies like power outlet maker Eubiq to raise wages for most employees by between 7 per cent and 20 per cent.

'We chose to offer competitive wages to retain talent. It is also clear that living expenses are rising, so the minimum wage increase for our staff is five per cent,' said Mr Ng Joo Kok, Eubiq director of global business.

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