Private sector not feeling the heat to up pay

Civil service merely playing catch-up, say private firms, on pay hikes for fresh graduates


THE private sector is in no hurry to raise starting salaries for freshly minted graduates, despite moves by the civil service to do so.

One main reason for this, say companies and human resource (HR) consultants interviewed, is that the public sector is merely playing catch-up. They say the civil service tends to pay its rookies less than does the private sector.

The civil service will raise the starting pay of new graduates outside its Administrative Service by 10 per cent to $2,600 a month from June.

But this new pay in its Management Executive Scheme is for those with at least a second class upper honours degree.

Despite this hike, their pay is still lower than most of those in five sectors selected for comparison. The gap is particularly wide when matched against such skill-specific industries as law or information technology, said HR consultants.

IT company EPS Computer Systems pays non-honours degree graduates between $2,600 and $3,000 while those with honours degrees take home $300 more, said its director, Mr Kevin Liang.

Private sector lawyers start at even higher salaries. Those in small firms earn around $4,000 a month, and in large firms, from $4,500 to $4,800, said five law firms and HR consultants.

Rookies at accounting firms can earn between $2,800 and $3,200 a month, with the recent change in starting salaries by the Big Four accounting firms.

Companies employing entry-level engineers pay them between $2,400 and $2,800, with chemical engineers earning the most.

The president of the Institution of Engineers, Singapore, Mr Tan Seng Chuan, does not foresee an increase as the existing pay is comparable to the civil service's.

But it takes more than a fat pay cheque to draw talent, said the companies and HR consultants interviewed.

United Overseas Bank (UOB), which pays new graduates with a general degree about $2,400, said joining the bank was also about 'interesting work, personal growth and long-term career opportunities'.

Starting pay is less of an issue in the financial sector as the bonuses are generally bigger and the promotions faster.

Kelly Services' Asia-Pacific vice-president and managing director, Mr Dhirendra Shantilal, echoed this: 'Graduates look for jobs that will also present them with a conducive environment to work, learn and grow.'

He added: 'Pay may be a deciding factor for those already thinking of going into public service, though.'

For graduates like computer science major Yong Zhen Hoe, 25, learning opportunities are more important than the starting pay.

'I want to experience all aspects of a business or an organisation where training is structured, like a multinational corporation or the civil service,' he said.

Apart from attracting young talent, the civil service has another battle to fight.

Its attrition rate rose from 4.8 per cent in 2005 to 5.7 per cent last year. In some areas, it was as high as 25 per cent.

These rates worry the Government, but the private sector does not perceive them as alarming. In engineering, it is normal for companies to see an attrition rate of about 10 per cent, said Mr Tan of the Institution of Engineers, Singapore.

In banking, it is higher, ranging from 20 per cent to 25 per cent, say HR experts. For instance. it was about 18 per cent at UOBlast year.

Mr Peter Lee of wages consulting firm Remuneration Data Specialists said even a 20 per cent rate is very healthy.

'Not everyone can move up to director level in a company, so it's natural for people to want to move on.

'Plus, it's a good renewal process, with new blood bringing fresh ideas,' he said.

Those who quit tend to be in the 25 to 35 age group.

Many in this group have three to five years of experience, are mobile and are hungry for new challenges, say HR and wage specialists.