According to Indian Federal Law, employers are required to pay employees a minimum of INR 362/day for unskilled workers and a minimum of INR 438/day for highly skilled workers. This minimum wage is effective from 1st April 2020. In Singapore, the Employment Law has no minimum wage regulations. However, there are a few exceptions in Singapore in which a minimum income applies. The minimum salary in Singapore as of July 2020 for cleaners is at 1,236 SGD (roughly at 915 USD).
Whilst minimum wage varies from one country to another, the question remains: Should a company pay employees more than the required wages? To answer this question better, here are some considerations HR must understand.
One thing for certain, offering candidates more than the minimum wage could win them over from competitors. This could be a great strategy for companies to attract more loyal and hardworking individuals as well. Based on a LinkedIn survey, 70 percent of professionals want to hear about salary in the first message from a recruiter. Meanwhile, 59 percent of candidates stated that salary was the first leading factor that contributed to feeling fulfilled in their career, and understanding pay and benefits are clearly top of mind during a job search.
SHRM also reported that higher pay remains more important than culture and benefits. Offering higher salary will make employees more productive and engaged at work because they won’t be distracted with personal finances and challenges.
Employers, especially those of small-to-medium businesses might not generate enough profits to offer more than the minimum wages. For SMEs, offering a higher salary might not be a smart move for their financial plan. For instance, if small businesses want to offer a salary above the minimum, they might need to reduce headcounts and work with fewer people on board. This, consequently, will burden existing employees with long hours and more responsibilities which could lead to lower employee satisfaction and more stress-related work.
Offering candidates and employees a strong salary and benefits is a solid strategy for stronger retention. Yet, this could be a burden for small-to-medium businesses that are not making as much profit as big companies. If your organisation is keen to stay competitive in terms of wages, employers can set up other offers, such as considering boosting hourly rates in small increments over the course of a year or two. For example, employers can increase pay 20 percent per hour every 3 months. Another alternative is to offer an increment for an additional dollar for employees who reach certain tenure.