If you are planning to work in Singapore, you might be wondering what is the basic salary in Singapore and how it is calculated. Basic salary is the amount of money a salaried employee earns before their employer makes any deductions or additions. It is the initial salary an employee earns which does not include any benefits, raises or bonuses.
Basic salary is an important metric when you are calculating your compensation for services rendered to an employer. There are several factors employers consider to determine basic pay, and it is important to know them to ensure you are getting your due remuneration. Knowing how to calculate basic earnings and how they differ from gross and monthly salary can help you better plan your finances and plan for retirement.
In this article, we will answer some common questions about basic salary in Singapore, such as:
- What is the average basic salary in Singapore?
- How is basic salary calculated in Singapore?
- How does basic salary compare to gross salary in Singapore?
- What factors affect basic salary in Singapore?
What is the average basic salary in Singapore?
According to a survey of 11,200 graduates, the median gross monthly salary for full-time permanent jobs increased from $3,600 in 2019 to $3,800 in 2021. The Jobstreet Salary Report 2022 revealed that 41 industries in Singapore had increased gross salaries since the previous year, with transportation, information technology, and finance featuring the highest percentage of job ads with higher salaries than 12 months prior.
However, these figures do not reflect the basic salary, which is the amount before any deductions or additions. To get an estimate of the basic salary, we need to look at the average salary by occupation and industry. According to Salary Explorer , a person working in Singapore typically earns around 8,450 SGD per month, with salaries ranging from 2,140 SGD (lowest average) to 37,700 SGD (highest average). However, these figures may vary depending on the level of experience, education, skills, and location.
Some of the highest paying occupations in Singapore are:
- Legal: 17,300 SGD
- Engineering: 11,800 SGD
- Executive and Management: 11,500 SGD
- Accounting and Finance: 10,900 SGD
- IT: 10,400 SGD
Some of the lowest paying occupations in Singapore are:
- Cleaning and Housekeeping: 3,060 SGD
- Food / Hospitality / Tourism / Catering: 3,200 SGD
- Customer Service and Call Center: 3,620 SGD
- Factory and Manufacturing: 4,110 SGD
- Sales Retail and Wholesale: 4,260 SGD
How is basic salary calculated in Singapore?
For calculating salary, a “month” or “complete month” refers to any one of the months in the calendar year. Salary for an incomplete month of work is calculated as follows:
Monthly gross rate of pay ———————————— Total number of working days in that month × Total number of days the employee actually worked in that month
If you are a monthly-rated full-time employee and took unpaid leave for the month, you should count it as an incomplete month of work to calculate your salary.
Basic rate of pay is used for calculating pay for work on a rest day or public holiday. Basic rate of pay includes wage adjustments and increments that an employee is entitled to under a contract of service. Basic rate of pay excludes overtime payments, bonus payments and annual wage supplements (AWS), reimbursement of special expenses incurred in the course of employment, productivity incentive payments, and any allowance.
For a monthly-rated employee, the basic rate of pay for one day is calculated as follows:
12 × monthly basic rate of pay ———————————— 52 × average number of days an employee is required to work in a week
Gross rate of pay is used for calculating salary in lieu of notice of termination of service, salary in lieu of annual leave, salary deduction for unauthorised absence from work, paid public holidays, and approved paid leave.
How does basic salary compare to gross salary in Singapore?
Gross salary is the total amount of money including allowances, payable for one month’s work. This excludes additional payments (overtime, bonus, AWS), reimbursement of special expenses incurred during the course of employment,
and productivity incentive payments.
Gross salary is usually higher than basic salary because it includes various allowances and benefits that are added to the base pay. Some common allowances and benefits that are included in gross salary are:
- Housing allowance
- Transport allowance
- Meal allowance
- Medical allowance
- Education allowance
- Performance bonus
- Annual wage supplement (AWS) or 13th-month bonus
However, gross salary is not the same as net salary or take-home pay, which is the amount of money an employee receives after deductions such as tax, health insurance, and retirement plans. The amount of deductions depends on the employee’s income level, marital status, number of dependents, and contribution to the Central Provident Fund (CPF), which is a mandatory social security savings scheme for Singaporeans and permanent residents.
The CPF contribution rates vary depending on the employee’s age and wage bracket. For example, for employees aged 55 and below earning more than $750 per month, the employer’s contribution rate is 17% and the employee’s contribution rate is 20%, resulting in a total contribution rate of 37%. This means that 37% of the employee’s gross salary will be deducted and deposited into the CPF account, which can be used for retirement, healthcare, housing, and education purposes.
What factors affect basic salary in Singapore?
There are several factors that affect basic salary in Singapore, such as:
- Occupation and industry: Different occupations and industries have different market rates and demand for skills. Generally, occupations and industries that require higher levels of education, experience, and specialisation tend to pay higher basic salaries than those that require lower levels of skills.
- Experience and education: Employees with more years of relevant work experience and higher levels of education tend to command higher basic salaries than those with less experience and education. This is because they are more likely to have acquired valuable skills and knowledge that can contribute to the organisation’s performance and goals.
- Skills and performance: Employees who possess skills that are in high demand or scarce in the market can negotiate for higher basic salaries than those who have common or easily replaceable skills. Similarly, employees who perform well and exceed expectations can earn higher basic salaries than those who perform poorly or meet the minimum standards.
- Location and cost of living: Employees who work in locations that have a higher cost of living or are more competitive may receive higher basic salaries than those who work in locations that have a lower cost of living or are less competitive. This is to compensate for the difference in living expenses and to attract talent to the location.
- Negotiation and market conditions: Employees who are able to negotiate effectively and demonstrate their value to the employer can secure higher basic salaries than those who accept the initial offer or do not negotiate at all. Additionally, employees who are aware of the market conditions and trends can leverage their knowledge to negotiate for higher basic salaries or look for better opportunities elsewhere.
Conclusion
Basic salary is an important component of an employee’s compensation package. It is the amount of money a salaried employee earns before any deductions or additions. Basic salary is affected by various factors such as occupation, industry, experience, education, skills, performance, location, cost of living, negotiation, and market conditions.
Basic salary differs from gross salary, which includes allowances and benefits, and net salary, which is the amount after deductions. Knowing how to calculate basic salary and how it compares to gross and net salary can help employees plan their finances and career goals.
