SINGAPORE: When a survey about the starting salaries of fresh graduates made the headlines in February, one 25-year-old, who only wanted to be known as Kathleen, was shocked by the findings.
The 2022 Joint Autonomous Universities Graduate Employment Survey, which was conducted by four universities in Singapore, revealed that the median gross monthly salary of last year’s graduates had shot up from S$3,800 in 2021 to S$4,200.
This was a sharp spike compared to previous years, where median salaries for fresh graduates typically increased by S$100 each year.
Nearly all course clusters – except for the arts, media and design – saw an increase in starting salaries ranging between S$65 and S$700.
The increase was the most significant in the engineering course cluster, which saw the median gross monthly salary of those in full-time jobs increase from S$3,900 in 2021 to S$4,600 last year.
This would mean that someone starting a job in 2021 at the median salary point would have needed an 18 per cent pay increase to match 2022’s level.
For Kathleen, who has been working for nearly two years in a sustainability role in the private sector, this was a bitter pill to swallow.
While she declined for the exact details of her salary to be published, the amount she shared with CNA was lower than the median starting pay of last year’s fresh graduates, despite annual increments.
“It’s very sad. When the report came out, my friends and I couldn’t believe it,” she said.
“We have been working for two years only to be on the same pay or even lower than a fresh graduate.”
A friend of hers – who also graduated in 2021 and has about two years of experience in consultancy – had told her that her company recently hired a fresh graduate, who had a higher starting pay than her, said Kathleen.
“But she got an increment because he came in, if not, he was going to earn more than her. So she got lucky,” she added.
Kathleen isn’t the only one whose salary is now lagging behind those with less experience than them. CNA spoke to three other people who graduated between 2019 and 2021, one of whom was also earning less than S$4,200.
The 27-year-old, who only wanted to be known as Samuel, told CNA that he had recently been given a salary increment of S$300, after working full-time for six months in the public sector.
This bumped his gross monthly salary to S$3,700, which was still below last year’s median salary of S$3,800 for those in the humanities and social sciences cluster.
“It did surprise me a little bit that even with my increment, my salary is still lower than the median salary for fresh graduates last year,” said the 27-year-old, who graduated in 2020 with a degree in Geography and also has a master’s degree in urban planning.
“But I don’t really have any strong views about it because I think there might be underlying caveats to the study as well,” he said.
“So I don’t think it affects my outlook on my current job or whether I should be asking for more salary.”
The other two, who only wanted to be known as Stephanie and Megan, were both earning around S$5,000.
Stephanie graduated in 2020 with an environmental degree and has been working for nearly two years in a finance role, while Megan – who graduated in 2019 with a degree in linguistics – has been with her current employer for about seven months, working in human resources (HR).
But with rising costs increasingly eating into wages, some junior employees may feel like they have been low-balled.
In January, Singapore’s headline inflation inched up to 6.6 per cent year on year, from 6.5 per cent in the previous month, according to data published by the Monetary Authority of Singapore and the Ministry of Trade and Industry last month.
Core inflation, which excludes accommodation and private transport, rose to 5.5 per cent year on year, up from 5.1 per cent in December 2022.
This was largely driven by higher inflation for services, food and retail and other goods, along with the increase in the goods and services tax (GST) rate.
The authorities maintained their inflation outlook for this year, with headline inflation expected to average 5.5. to 6.5 per cent and core inflation, 3.5 to 4.5 per cent.
“My wage has increased but I feel like it’s not increasing enough as compared to inflation,” said Stephanie, adding that her starting pay was around S$4,000.
“Inflation and the GST are really taking a pinch on a lot of us and I’m feeling the impact of the rising costs for things like my daily necessities and transport.”
“I would be lying if I said I wasn’t jealous of them because they graduated later than me and don’t have as much experience as me, but they’re earning more than I did when I first started,” she admitted.
THE BATTLE FOR TALENT
While fresh graduate salaries have been increasing steadily each year, experts said last year’s jump was larger-than-usual due to the tight employment market.
The latest data from the Ministry of Manpower (MOM) showed that the number of job vacancies had declined from an all-time high of 128,100 in March last year to 105,200 in September. However, this remained significantly higher than pre-pandemic levels.
In turn, the seasonally adjusted ratio of these vacancies to unemployed people was 1.97 in September – meaning there were nearly two vacancies for every one unemployed person. Figures for December and this year have not been released yet.
With companies eager to restart their activity after nearly two years of absorbing blows from the pandemic, this drove many to up the ante to attract and retain workers, experts told CNA.
“Companies felt this real sense of rush to hire people and put them back to work, with some people starting as early as Q3 2021 to do work the minute some of the restrictions were lifted,” said Randstad’s managing director Jaya Dass, who helms the recruitment and HR services provider’s offices in Singapore and Malaysia.
“These were positions that were open for too long and so, they needed to backfill (the process of filling a position that has been vacated) and then, expansion plans happened and a lot of companies were overly committed in 2022 to recovering from two years of economic loss.”
“When you have that kind of climate, what happens is that you are desperate for talent and you need to pick everybody up,” she added.
HR practitioner Carmen Wee said the unprecedented wave of tech adoption for businesses during the pandemic also exacerbated demand for those with more technical skills, such as tech and engineering graduates.
According to data from Seek, the parent company of job platforms JobStreet and JobsDB, the growing demand for tech talent in Singapore remains strong despite recent layoffs by tech companies.
In a news release published on Jan 10, the firm said JobStreet Singapore’s platform recorded a year-on-year growth of 63 per cent in job ads for tech roles, which is a higher rate of increase than the overall job ad growth in the country (54 per cent).
When CNA searched for full-time IT jobs in Singapore on LinkedIn on Wednesday (Mar 8), there were nearly 6,000 listings for entry-level positions posted in the past month.
This number was significantly higher for engineering jobs, which had more than 10,500 entry-level full-time positions posted in the past month. Out of this, nearly 3,000 had been posted in the past week.
In comparison, fields such as HR and finance had under 3,000 listings for entry-level full-time jobs in the past month.
“Even before the pandemic, we had a shortage of tech talent, but this was exacerbated by COVID-19 because suddenly, many companies started turning to digital strategies to get through that period and also started to think about how to future-proof their businesses,” said Ms Wee.
“Now that we’re out from the worst of COVID-19, these companies are still continuing to accelerate the digital transformation with their projects and initiatives which means that the talent shortage in the tech sector continues and it has even flowed into the general economy.”
“So now, we have a huge talent crunch because the demand for tech talents is huge but it is not being supported with an ample supply of local talent,” she added.
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Amid the tight employment market, companies CNA spoke to said they have been offering competitive salaries to attract new talent.
Cisco, which has been hiring across the board with about 20 vacancies in different roles such as systems engineering and sales as of Friday, said it designs its compensation packages to be competitive with local talent markets.
“In our last salary review for new graduates, we offered salaries that are well-positioned within our internal pay range and that stand competitive in the market,” said Ms Anupam Trehan, the company’s people and communities leader for the Asian region.
She added that the company continues to see “strong” interest in the open job positions that it puts out.
According to the latest graduate employment survey, the information and digital technologies cluster had the second-largest increase in median salary last year, rising from S$5,000 in 2021 to S$5,625.
PwC Singapore, which also has vacancies in areas such as software engineering and risk services, said it has made shifts in compensation and benefits to stay competitive “like every major employer”.
However, not all companies may be able to compete on salaries, according to the Singapore National Employers Federation (SNEF).
“For SMEs with a relatively smaller workforce, any unfilled job vacancy may mean turning away business and requiring existing employees to take on additional workloads,” said SNEF’s executive director Sim Gim Guan.
“To better attract talent, SMEs could redesign jobs to enable their employees to perform at a higher level, which will in turn allow the employers to pay more,” he added.
Creative agency Blak Labs, which has recruited about five graduates since 2019, said it provides opportunities for its new hires, in addition to offering competitive salaries.
“The market here is extremely tight in terms of talent,” said the company’s managing partner Charlie Blower. “Our approach is to reward based on merit and contribution to the business.”
“Clearly, there are businesses with deeper pockets but we believe there is a trade-off between their working environment and the opportunity that we offer.”
ATTRACT BUT ALSO RETAIN
Beyond dangling higher salaries for new hires, experts said it’s also crucial for companies to make corresponding increases to the wages of existing employees to ensure pay equity and fairness.
With the recent spike in median salaries likely to narrow the salary gap between new entrants and junior employees, companies will need to address any pay discrepancies, Dr David Leong, managing partner of PeopleWorldwide Consulting, an HR advisory and search firm.
“Employers must re-calibrate their salary brackets and adjust pay equity quickly otherwise, disgruntled employees might leave their jobs for better pay,” he said.
He added that wage adjustments should also take into consideration factors such as an employee’s experience, contributions to the company and performance.
If left unchecked, Ms Wee said this could result in pay compression, which occurs when new hires are brought in at salaries close to or equal to those of existing employees.
This could deteriorate staff morale and speed up the revolving door of talent, she added.
Companies CNA spoke to said they regularly review staff salaries to ensure fairness in remuneration.
National HealthTech agency IHiS said it hires around 100 fresh graduates a year, adding that it is currently actively recruiting tech talents for roles such as data analytics and software engineering.
The agency’s chief human resource officer May Wee said IHiS conducts regular reviews and offers a competitive salary which is benchmarked against the industry.
“Correspondingly, the salary we offer for both fresh grads and existing hires have been adjusted accordingly to ensure minimal wage discrepancy,” said Ms Wee.
This appeared to be the case for all the companies CNA spoke to including Cisco, Deloitte, Blak Labs, PwC and DBS, who said they reviewed salaries across all levels regularly and made pay adjustments, where there were discrepancies.
Last year, the Government also announced that about 23,000 civil servants would benefit from salary increases of between 5 per cent and 14 per cent, as part of efforts to attract and retain its fair share of talent.
Beyond salaries, Mr Adrian Choo, CEO and Founder of consultancy firm Career Agility International, said companies should also regularly engage their employees in career conversations.
“It’s not always about the money, when it comes to whether people stay or leave,” he said. “There are other factors such as work-life balance, training and investment in their career and the office environment which might cause employees to leave their jobs.”
Some companies like IHiS, DBS, Cisco and Deloitte also said they offer a hybrid work model and flexible work arrangements.
“Since the beginning of 2021, we (have given) all employees the flexibility to work remotely up to 40 per cent of the time,” said DBS’ head of talent acquisition group Susan Cheong, adding that caregivers and young parents have the option to work remotely completely for up to six months at a stretch.
“Such arrangements support employee needs and aspirations, which tend to change along with their life stages and personal circumstances.”
A CHANGING SITUATION
While the recent survey findings of higher median salaries look promising for recent graduates, experts cautioned that things may not be as rosy as they seem.
Noting that the graduate employment survey had looked at employment rates as at Nov 1, Randstad’s Ms Dass said the data may not fully reflect the current economic situation.
“What fresh graduates were getting offered in the months before the survey concluded, was reminiscent of the market sentiment and mood in which we saw a new pricing for talent post-pandemic,” she said.
“Everybody was hiring at the same time and companies needed to move quickly which meant that as long as a candidate showed some potential, companies would be more likely to hire them – and even pay a higher salary – because for them, they could not afford to have their position left unfilled.”
Since then, things have taken a turn, she said.
“Right now, a lot of the purging you see from companies, such as the retrenchments and layoffs by all the tech companies, has got to do with inflated or bloated talent cost,” she said.
“Companies, in general, are careful about over-inflating their hiring costs, even though demand for new talents has not dropped,” she said.
“They are very afraid of going through retrenchment exercises and putting people out … so they are very careful before they hire people and offer exceptional salaries.”
According to MOM’s latest labour market report, which was published in December, retrenchments increased to 1,300 in Q3 2022 from a record low of 830 in the previous quarter. This was largely driven by the tech sector, which saw layoffs increase from 110 to 520.
Last month, CNA reported that an estimated 190 employees from Google’s Asia-Pacific headquarters in Singapore were laid off, accounting for about 5.5 per cent to 6 per cent of the company’s workforce here.
While there is still demand for tech talent, SNEF’s Mr Sim said fresh graduates’ salaries may not see similar increases this year, with economic growth and labour market tightness expected to ease.
“(Median starting salaries) won’t go back to what it used to be, but my expectation is that it will arrive at a mid-point, meaning we won’t see the same trajectory of increase as last year,” she said.
“There will still be some people – particularly in science, technology, engineering and mathematics (STEM) careers or technical roles – that will be able to demand that their pay packet be increased or for their starting point to be higher than what it used to be, but it will be a smaller number of people who will do it,” she added.
TO STAY OR GO
So, should junior employees, whose pay might now be lower or equivalent to that of new entrants, stay or leave to seek higher pay? It depends, said HR experts.
While pay increments for those who stay within the same company are usually smaller compared to if they jumped to another company, Career Agility International’s Mr Choo said this also depends on whether they have the right skills and what industry they are in.
“If they don’t jump ship, their salaries might lag behind their peers but if they want to catch up (in terms of their pay), they have to be really good at what they do and be able to negotiate for a higher pay when they move to a new company,” he said.
For those who might be thinking of quitting their current jobs only to rejoin later with the hope of getting a higher pay, this might backfire.
“It doesn’t work like that,” said Randstad’s Ms Dass. “Very rarely do people (at a junior level) have that bargaining power and they usually would not be entertained to come back (at a higher pay) unless they’ve got an external market experience.”
“This would mean coming back to the organisation at a more qualified level” she added.
Among the six junior employees CNA interviewed for this report, whose length of service ranged from six months to two years, none had plans to leave their jobs for higher pay.
This was despite earning a similar – or in some cases, lower – wage to last year’s batch of graduates.
Megan, who graduated in 2019 and currently earns around S$5,000, said: “I think there’s no point in comparing salaries because at the end of the day, what can I do about it? It’s not something I can solve.”
“I’m just glad to have a job,” the 27-year-old added.
While some like Stephanie and Samuel – who both had a lower starting pay compared to last year’s graduates – felt like they were not in a position to negotiate for a higher salary, others were more determined to get their fair share.
“There are benefits to my current job. I do enjoy my work but I would also like my salary to be higher than what fresh grads are getting now, otherwise it feels like I’m starting from scratch again,” said Kathleen.
“My initial plan was to stay for five years but I’m seeing in the job market that people are paying between S$4,000 to S$5,000 for fresh grads or people with one to two years experience in similar corporate sustainability roles, so I’m keeping my mind open.”