Companies in Singapore have projected an average 4.4% salary increase in 2011 to reward and retain employees as they foresee their junior managers and professionals leaving in droves next year.

Singapore Salary Increase Survey

According to a Singapore Salary Increase Survey by Human Capital Consulting and outsourcing firm Aon Hewitt, manual workers will have the lowest pay raise at 4.4%.

Employees at the junior management, professional or supervisory levels will receive the highest salary increase next year at 4.6%. Yet they are also the group that has been predicted to have the highest voluntary turnover rate across all industries.

Nine in 10 employers said the most cited reason for leaving is “better external opportunity”, followed by “external equity of compensation” and “limited growth opportunities”. Average turnover rate across industries is 11.7%, similar to 2009′s figure.

But good news is salary freezes are down from 5% in 2010 to 1.2% next year. For now, variable pay bonuses remain safe with only 3.3% of respondents indicating that they will reduce year-end bonuses.

At least 2% will continue a hiring freeze in 2011, a sharp drop from 11.3% who stopped recruiting this year. Likewise, most companies are planning to add headcount as business improves. Only 6.1% felt it would be necessary to control the size of their workforce next year.

Samir Bedi, Aon Hewitt’s Southeast Asia solution leader for its performance consulting practice, said the strong GDP (gross domestic product) growth in 2010 has created more job opportunities for employees. With today’s business strategies focused on “sustainability and de-risking”, the high salary increase forecast is a result of HR seeing a critical need to reward and retain talent. “Employers are using healthy budgets in compensation as one of the tactical measures to create a differentiating high performance culture.”

The most prevalent retention measures used by organisations are providing accelerated career development opportunities and timely and meaningful feedback from managers. Close to 60% also offer long-term incentives such as stock options and restricted stock “to retain employees and to drive the organisation’s performance”.

Sources and references: Human Capital Consulting, Aon Hewitt, HRO