By Esther Teo & Jonathan Kwok

EVEN as firms are emerging from the recession, they face a potential problem - unhappy workers who are frustrated with their pay cuts and headcount freezes over the past year.

Management consultancy Hay Group warns that 'sweat debt' - a human resources term used to describe the extra effort put in by employees - could pose a threat to bosses if employees get disgruntled enough to vote with their feet.

Hay Group surveyed 25,000 employees in Singapore-based companies last month. The findings reveal that 29 per cent of employees feel frustrated in their jobs while 35 per cent feel detached. Hay Group describes this 'detached' group as employees who are physically present but have their minds and hearts somewhere else.

Only 16 per cent feel effective, indicating that companies are not realising the full potential of their workforce.

One-third of those indicating frustration said they planned to quit in a year, citing a lack of empowerment and a desire for better working conditions and more effective superiors.

Hay Group insight regional director Steven Choo said these findings indicate that some employees may be feeling stretched in helping their firms overcome the downturn. He warned: 'Companies may soon face a talent exodus as soon as the economy strengthens if nothing is done to reward and recognise the sweat debt that employees have accumulated over the last year.'

An unnamed employee at a medium-sized sales firm told The Straits Times that he might start looking for other jobs if his company does not increase his pay as agreed. His wages were frozen at the end of last year, but he was told to expect a partial increment by the end of this year and further increases going into next year. He expects his pay to go up by around 6 per cent by the middle of next year.

Mr Pan Zaixian, the financial services manager of global recruitment firm Robert Walters, agreed that many employees do feel that they are working harder and may feel tempted to quit. But he advised them to see the bigger picture - to realise that the recession is an exceptional global event with positive signs of recovery still in their early stages.

'Rather than feel dissatisfied with their current situation, employees who enjoy the high bonuses in the good days should be prepared to grind it out in the not-so-good days,' he said.

In fact, some firms have managed to maintain staff morale in this recession because of good communication in explaining the rationale of the pay cuts, said Mr Kevin Ong, a consulting leader from human resources firm Towers Perrin.

Restaurant chain operator Apex-Pal International is one of them. Its chief executive officer, Mr Douglas Foo, said: 'We have been openly communicating our policies and the necessary measures... Our staff are in line with the company's vision and mission.'

Mr Foo added that with business picking up, he was already looking to restore salaries to their original levels by the first quarter of next year.

The survey showed a modest salary increase of 2.3 per cent for this year and forecast a 3 per cent increase for next year. Variable bonuses for this year will likely remain modest at 1.8 months and are forecast to be marginally lower at 1.5 months next year. The total number of companies cutting or freezing pay has also dropped, from 58 per cent in March to 18 per cent last month. This is out of the 265 Singapore-based companies from both the private and public sectors surveyed.

This article was first published in The Straits Times.