By CHUANG PECK MING

THE bad news for Singapore workers is that the overall pay increase is tipped to be just 2 per cent this year - the lowest in more than a decade, according to a poll by consultancy firm Watson Wyatt.

The good news? The chance of them losing their jobs is relatively low. Lay-offs are at the bottom of the list of cost-cutting measures employers here are taking to fight the current business slump, according to the poll.

The projected 2 per cent rise in salary budgets is the latest news from a poll of almost 70 employers in February - and a sharp come-down from a 4 per cent forecast in October last year, Watson Wyatt said yesterday.

'If this projection comes true, it will be the lowest salary increase since Watson Wyatt started collecting quarterly HR trends data in 1997,' the firm said.

So far, Watson Wyatt's polls show 6.2 per cent to be the highest salary rise projected - and that was for 1997.

The forecast for last year's pay hike was 4.7 per cent.

Reflecting worsening business conditions in 2009, the February poll shows that almost 31 per cent of employers were freezing wages, up from 5 per cent in a poll seven months earlier.

A lower variable bonus of 1.4 months' pay is also projected for 2009, down from 1.8 months projected in October 2008.

But Watson Wyatt said that while workers cannot expect the kind of raise they have enjoyed in good times, they can still look forward to rewards for past performance.

'As challenging as the business outlook may be, Singapore companies recognise that they need to reward their top performers while practising prudence to contain costs,' said Yvonne Cox, managing director of Watson Wyatt Singapore.

'By implementing sustainable cost-cutting action, companies are ensuring their businesses have the necessary resources and skills for the upturn.'

The poll shows that of the top six cost-cutting measures taken by employers here, five are related to employment costs - headcount freeze, hiring freeze, cut in training and reduced salary increase and variable bonus.

'Unlike companies in the United States, which have mainly resorted to retrenchment in this recession, it is ranked as the 12th choice in Singapore,' Watson Wyatt said.

And that was at the bottom of the list.

This article was first published in The Business Times.