Delay in salary hikes lead to higher turnover rates at Singapore companies

SINGAPORE: Nearly half of employers in Singapore are reporting a rise in employee disengagement and staff turnover after holding back or reducing salary increases this year, according to a new survey by recruitment firm Robert Walters.

The findings reveal a link between compensation decisions and workforce morale, with 45% of employers admitting they either postponed or reduced pay rises in 2025. Another 17% did not offer any salary increases at all.

Among those companies, nearly two-thirds (64%) noticed signs of employee disengagement, while 29% experienced higher staff turnover, suggesting that pay decisions are having immediate repercussions on workplace stability and employee retention.

The survey, which gathered responses from close to 200 professionals and employers across Singapore, highlights the tension between business cost pressures and the expectations of a workforce navigating rising living costs and an uncertain economic climate.

When asked why they withheld or adjusted salary increases, employers most commonly cited overall business performance (34%), budget constraints (23%), and broader market uncertainty (23%).

From the employee’s standpoint, dissatisfaction appears widespread. Of those who did not receive a raise, nearly three-quarters (72%) said they are now actively looking for new job opportunities.

Even among those who did get a raise, 58% felt the increase fell short of expectations. An overwhelming 92% of all respondents believe they are underpaid relative to market standards.

“Companies need to weigh the long-term costs of disengagement and turnover,” Kirsty Poltock, Country Manager at Robert Walters Singapore, said, “Delaying or reducing salary increases might solve an immediate budget problem but could end up costing more in the form of lost talent and decreased productivity.”

The report recommends that employers take a more strategic approach to compensation planning, leveraging market data to guide salary discussions and supplementing pay with non-monetary incentives.

These could include opportunities for career development, flexible working arrangements, and internal mobility, all of which can help bolster morale and employee loyalty even in tight economic conditions.