Salary increments in 2020 will be largely flat, according to the results of Mercer’s annual Singapore Total Remuneration Survey for 2019. This appears to pose something of a problem for companies in Singapore, where surveys over the last few years have consistently found high salary expectations among younger workers.

For instance, fresh graduates can reportedly expect an average starting salary of S$3,500/month (US$2,571), a figure which just as consistently draws groans and eye-rolling reactions from business owners who claim that it is unrealistic. Those expectations rise even higher for graduates with IT qualifications: one survey this year found that IT graduates now expect S$4,500/month (US$3,306), a reflection of the higher demand but very low supply of technical and digital talent.

Pay no longer the make-or-break factor

In an apparent contradiction to fresh graduates’ optimism, the results of multiple salary surveys also indicate that pay is no longer the make-or-break factor for talent attraction and retention. For example, the Michael Page 2020 salary survey found that 91 percent of employees would not leave their jobs primarily because of monetary benefits.

This is a surprising reversal in a short period of time. Just a few years ago, pay was considered one of the make-or-break factors for getting and keeping talent. Back in 2016, for instance, the Hays Asia salary survey found that 43 percent of employees would leave their job because of salary and benefits What was more, a full third of respondents expected a salary increase of more than six percent.

In comparison, this year’s Mercer survey found that salary increases would be around three point seven percent in 2020, fractionally up from three point six percent in 2019.

What changed?

Slowing economic growth in Singapore and around the region probably made employees more cautious about their jobs. By 2017, a Randstadt survey had found that a whopping 61 percent of employees in Singapore, many of them senior, were willing to accept a salary decrease or demotion in order to stay employed. At that point in time, Singapore’s economy was doing better than expected, but this was driven mainly by manufacturing, which accounts for around 13 percent of employment in Singapore.

That pessimism seems to have carried over to subsequent years: in 2018, another Randstadt survey found that almost 40 percent of respondents were expecting wage stagnation. Most of these were again in the older demographic.

But at the same time, the findings of salary surveys showed that employees here are placing increasing importance on other factors such as career progression, workplace culture, and work-life balance. A Robert Half survey from earlier this year found that just 24 percent of employees would go job hunting because of salary and benefits; the rest were more concerned with work-life balance, career development, and how well they were managed.

A different hiring paradigm

Rob Bryson, Managing Director of Robert Walters Singapore, observed that to attract and retain top talent, hiring managers need to be flexible and appeal towards what a modern candidate is looking for--which today goes beyond salaries. “Long-term career progression and stability are often not as important to current job seekers. Instead, they are likely seeking learning opportunities, continual challenge and variety, as well as strong, inspirational leadership,” he said.

This means more work on the part of managers to engage their employees’ and address concerns, not just while hiring but throughout the employees’ entire tenure with the company. It is no longer enough to simply expend effort during the hiring process, only to neglect the employees once they are onboarded and settled in. There needs to be consistent communication and engagement to keep people in the loop about changes to the company or their work, openness and flexibility to address concerns they may have, and even an entire change in the way companies view compensation.

“Companies should look beyond merit increments to design packages that take the motivational drivers of their multi-generation workforces into consideration,” said Mercer Singapore career products leader Kulapalee Tobing.

Pointing to how shrinking talent pools are pushing companies to rethink how they make themselves attractive to employees, she said: “There needs to be a shift from developing isolated reward initiatives towards more holistic talent strategies that acknowledge pay as only one means of differentiation and motivation.”

Fresh graduates, meanwhile, might want to temper their salary expectations.