Wage premiums set to surge because of talent shortages
Salaries for highly-skilled Singapore workers expected to reach second highest out of 20 major economies by 2030, says report
A highly skilled employee in the manufacturing, financial services or the tech and media sector here can expect to be paid an extra US$29,100 (S$39,500) a year by 2030 as talent shortages loom, says a new study.
This means Singapore companies will face the second-highest average wage premium out of 20 major economies examined in the study, putting pressure on profits.
The term "wage premium" refers to the additional salary employers will need to pay above normal inflation increases in order to keep staff.
Hong Kong tops the table with an average wage premium of US$40,500 a year while Australia takes third place with US$28,600.
Globally, the average pay premium for skilled workers in the Asia-Pacific region could be more than US$14,700, the study by consulting firm Korn Ferry showed.
"Although major economies can expect the highest wage premiums, smaller markets with limited workforces will feel the most pressure," it noted. "By 2030, Singapore and Hong Kong - small economies with important financial centres - are forecast to face a wage premium equivalent to about 10 per cent of their respective 2017 gross domestic products (according to International Monetary Fund estimates)."
Mr Ben Frost, vice-president and general manager of reward products at Korn Ferry, said: "The talent shortage will force companies to think differently about career progression.
"If you don't promote a highly skilled employee, a competitor probably will, so organisations may be pushed to award promotions earlier than they otherwise would."
The estimated talent deficit of 85.2 million workers across the 20 major economies by 2030 is expected to add about US$2.5 trillion to company payrolls each year, Korn Ferry noted.
Mr Dhritiman Chakrabarti, Korn Ferry's Apac head of rewards and benefits, added: "The new era of work is one of scarcity in abundance: there are plenty of people, but not enough with the skills their organisations will need to survive.
"While overall wage increases are just keeping pace with inflation, salaries for in-demand workers will skyrocket if companies choose to compete for the best and brightest on salary alone."
Mr Chakrabarti also suggested that competing for limited talent is unsustainable in the long run, and that companies should instead focus on engaging and reskilling existing employees.
"In tomorrow's world of work, the employees who will succeed won't necessarily be the people with the highest level of academic achievement. Instead, they will be the ones who are adaptable and willing to learn, with enough flexibility to handle rapidly shifting working environments, and less hierarchical structures," he said. - THE STRAITS TIMES
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