Median Salary For Fresh Graduates Has Gone Up By $400 To $4,200 In 2022: Should Singaporean Companies Be Willing To Pay More?
In our everyday lives, we tend to make comparisons between others across many attributes. This can be our physical attributes like height and weight, our material possessions like cars and houses, or, for workers, our salary.
While most of us may not share our how much we earn with others, whether due to personal preference or being compliant with the salary confidentiality clause in our employment contract, we can’t help but be curious about what others with similar backgrounds and work experience are earning.
Employment surveys like the recent 2022 Joint Autonomous Universities Graduate Employment Survey are one way to peek at what others might be earning and see how we fare ourselves. Aside from employees, employers might also use this information as a starting point to understand the job market.
For instance, based on the survey of 15,984 fresh and 1,138 follow-up graduates from the four universities in Singapore, the median salary rose by $400 from $3,800 in 2021 to $4,200 in 2022. This is a significant rise compared to previous years’ of around $100 increments.
However, should this finding also justify how much companies should be willing to pay for new hires and existing employees going forward?
Salary Increases Must Keep Up With Inflation
Each year, inflation erodes our purchasing power, and without a salary adjustment to account for it, real wages would fall.
For example, let’s assume a worker’s salary enabled him to purchase a basket of goods worth $3,000 in 2021. If he were to afford the same basket of goods in 2022, he would need to earn at least $3,183.64 or $183.64 due to the effect of annual inflation, which rose by 6.1%.
However, if he continues to earn the same nominal wage of $3,000 in 2022, this will result in a decrease in real wages because he will be able to afford less than before as the cost of goods would have risen more than his wages. As such, it’s the real wage increase that matters for workers and companies.
Therefore, employers must adjust any salary packages or increments based on the inflation rate to ensure a real wage increase. Due to the high inflation rate environment, which is currently above 6%, companies may have to pay a higher increment than they did in the past, when inflation was under 2%.
Read Also: 8 Things Singapore Businesses Need To Know About The $1.5 Billion Support Package To Provide Relief From Inflation
Demand And Supply In Labour Market Affect Salaries
The total employment in Singapore grew by 227,800 in 2022 and to above pre-pandemic levels. This increase is much higher compared to the last four years as companies that restructured and paused their hiring during the covid pandemic began recruiting more aggressively.
This sudden surge in hiring demand may have led more companies to be willing to pay more to secure the right talent in 2022 compared to the past few years. Going forward, global economic growth is expected to slow slightly in 2023, with the possibility of even a recession. This could lead to a less buoyant local labour market and a slower rate of wage growth.
Read Also: Singapore’s Employment and Salary Outlook for 2023: What Are the Headwinds and Industries That Might Be Affected?
What Median Salaries Tell Us
While we might find ourselves benchmarking our salaries to the median salaries reported in the survey, we must also understand that these figures represent the 50th percentile of the survey population. This means there are other graduates who earn less and others who earn more than the median salary.
Another point to note is that these figures are based on different course clusters and specialisations. For instance, though the general median salary rose by $400, course clusters like Information & Digital Technologies and Yale-NUS saw a greater rise in median salaries by between $625 and $800, respectively, while the median salaries for other course clusters like Arts, Design & Media, and Dentistry remained the unchanged.
Therefore, companies are not compelled to pay all their employees the median salary, regardless of the job functions and experience. For example, even if some employees in a company are required to perform the same job functions, the output level and results may vary depending on each candidate’s experience and ability, which is the basis for the remuneration package.
Read Also: 8 Things That Employers Are Legally Allowed To Deduct From Workers’ Salary (According To The Employment Act)
Money Is Not The Be-All And End-All
To the high-calibre candidates, the median salary would be nothing more than a number. Their salary expectations would be based on their perceived worth and what employers are willing to pay.
On the other hand, those of us earning less than the median wage may have to accept that we don’t have the same bargaining power and may end up being price takers when looking for employment. As such, even though we may have gained more experience down the road, our salaries might still be lower compared to the median salaries of fresh graduates. Instead, assuming we received a similar percentage increase in our salaries compared to the median salary – which rose by around 10% in 2022 – we can consider ourselves not being worse off.
Additionally, money may not be the only pull factor keeping someone in their job. Flexible work arrangements, incentives and welfare benefits, and a positive work environment are some examples of other factors that may allure some employees to accept a slightly lower pay package. Hence, while it’s simple to compare based on salaries, we must also factor in other non-monetary benefits that we may derive from our current jobs.
Read Also: 10 Types Of Company Benefits That Employees Have To Pay Income Tax On
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