Should Fresh Graduates Get Higher Salary Than Junior Employees?

By Radhika Wijesekera –

SINGAPORE (October 18, 2023) – Though Singapore’s inflation rate has come down from 5.4% at the start of this year, to 4.7% by May, the cost of living remains much higher than what it was before the pandemic. Against this backdrop, the need for the salaries of the lowest paying jobs in an office – those of fresh university graduates – to be raised was seen as being crucial.

We spoke to Terrence Yong, General Manager, Asia Pacific for Visier, the creators of the people analytics workforce planning software solution, regarding the effects of raising the salaries of fresh graduates, but not those of more experienced lower-level staff at the same time. This is what he had to say.

Singapore is one of the most expensive countries in which to live, and as such, Yong feels that it is commendable that a 10% jump in the salaries of new graduates was implemented in 2022. Specifically, their average pay rose from $ 3,800 to $ 4,200. Considering the conservative lifestyles of Singaporeans, where young people continue to live with their parents instead of living independently of them, this amount is found to be sufficient for their other day-to-day expenses.

Yet, employees still feel the pinch of high inflation and believe that there are further actions that can be taken to cushion the impact. Companies that continue to look into their employees’ happiness with increased compensation planning while ensuring the feasibility of doing so, would benefit from tools such as Visier’s Smart Compensation.

More and more employers find themselves struggling to strike the perfect balance in catering to the demands of many levels of employees. This is where analytical tools such as Visier People can be put to use. Offering the capability of processing empirical data which shows the organisation’s operational costs, income and profits, the application can deduce how best to allocate resources effectively whilst discovering potential cost-saving opportunities.

While it goes without saying that junior and more experienced employees should be compensated more than fresh hires with little or no experience in the industry, a recent survey revealed that in Singapore, many junior employees have salary that is lower than those with less experience, in spite of annual increments. Naturally, the morale of these employees would be low. Therefore, the need for more experienced employees to see their compensation increased is key to ensuring that they remain in the organisation and remain happy and productive assets. No company would want to witness a high rate of staff turnover due to reasons such as these.

However, increasing the compensation of more pay grades would increase the company’s expenditure and reduce its profit margins. This leads to further complications in managing the cashflows of the business.

But is there a win-win solution to this situation?

According to Terrence Yong, there is. “I strongly believe that making data-driven decisions, together with an understanding of employee performance, reasons for exit and pay philosophy, is what