Singaporean asks why companies pay new hires 20% more while loyal employees get 2% to 4% raises

SINGAPORE: Is the reward for loyalty… watching the new guy earn more than you?

That was the question one Singaporean recently posed after noticing what they saw as a growing trend, particularly in the banking sector, where companies seem willing to pay significantly more to attract new hires than to reward the employees who have stayed.

In a post on the r/askSingapore forum, the user claimed that annual salary increments at these companies are often limited to low single digits, around 2% to 4%, while promotion-related pay rises typically range from 8% to 12%. 

By comparison, external hires can reportedly secure salary increases of more than 20% simply by joining the same organisation.

Struggling to understand the logic, the user wrote, “From a business perspective, wouldn’t it be cheaper to retain existing employees who already know the systems, products, stakeholders, and culture instead of paying a premium to hire externally?”

The user added that they were keen to hear from hiring managers, HR professionals, or anyone with experience working in Singapore’s banking sector to understand better why companies take this approach.

“This happens globally”

In the comments, many users said workplace loyalty simply is not rewarded the way it once was. They argued that if your goal is to grow your income, you’re generally better off changing jobs every few years than staying with the same employer and waiting for annual increments or promotions.

Several commenters also pointed out that, from a company’s perspective, there is often little reason to give existing employees a substantial pay rise if they are already performing well and have no plans to leave. 

A modest annual increment of around 3 per cent, they said, is often enough to keep employees around, while the promise of a larger pay rise through a future promotion gives them something to work towards.

“If you want to chase pay, then job hopping is the way to go every few years,” one user wrote. 

“No such thing as company loyalty these days, especially with the ongoing layoffs and retrenchments everywhere. I’ve job-hopped a few times and more than doubled my salary comfortably instead of waiting for that next big increment from a promotion in a few years time.”

Another commenter said this isn’t just happening in Singapore or the banking sector.

“This happens globally. Nothing specific to SG. Internal HR policies and budgets dictate how much increments can be handed out.” 

“If you demand 20% and they agree, then everyone will demand the same. If you demand and they refuse, and end up hiring someone from the market with 20% increase in salary, its still better for the company. Because existing staff can’t ask for 20% YoY.”

A third added, “The external hires get higher salary bump to entice them to leave their current company and bring their so-called expertise to the new one.”

A fourth shared, “Once I had a conversation with a recruiter. Because it doesn’t make sense to train someone all over again. She told me straight up this is how the company operates. In order to get more than 5% increment, they have to submit report on why it’s justified. Unfortunately, if your company also operates like this, you know what to do.”

In other news, a foreign domestic helper has claimed that her employer threatened to send her back to her home country and leave negative feedback with the Ministry of Manpower (MOM) after she asked whether she was simply not the right fit for the household.

Writing in the SINGAPORE TRANSFER (No Fees/SD), DIRECT HIRE & NEW HELPER Facebook group, the helper explained that she raised the question because she had been struggling to meet what she described as her employer’s exceptionally high standards.

Read more: Maid says employer threatened to send her home and leave negative feedback after she asked if she was the right fit for the job