WORKERS here can expect more moderate salary rises and bonuses next year, going by a survey of 451 Singapore employers.

Factors such as the uncertainty in the euro zone and Singapore's rising inflation rate are affecting the outlook, said Hay Group, a management consultancy which carried out the survey.

Hay Group said salaries are increasing at an average of 5.2 per cent this year.

But that figure is expected to dip to 4.5 per cent next year. Average bonus payouts are also expected to fall to 2.3 months next year from 2.5 months this year.

Mr Victor Chan, Hay Group's regional general manager (Singapore and Asean) for productised services - a division that studies how a workforce can be managed effectively - noted that firms take into account various factors when making recommendations on salary increments. These include their outlook on the euro zone crisis, the pace of inflation, the tight labour market and restrictions imposed on hiring foreign workers.

Despite this increased caution, sectors such as industrial goods, oil and gas and natural resources still recorded the highest salary increases of more than 6.5 per cent, the report noted.

But business sentiment seems to have soured on the hiring front. Only 37 per cent of the firms surveyed had plans to lift staffing levels by 5 to 10 per cent this year, well down from 50 per cent at the same time last year.

The report noted that hiring is focused mainly on engineering, sales, finance and accounting, and administration and support service functions.

'It is not surprising that the sales function features highly in the top three most recruited.

'Organisations are aware that having a high achieving sales team could generate surplus revenue streams to cover revenue gaps especially in the current economic context,' Mr Chan added.

In the light of the challenging economic climate, the report also found that firms are increasingly 'working smarter, not harder'.

More than half of those surveyed are streamlining their business processes while 42 per cent are investing in technology.

Firms are also driving productivity through initiatives in talent retention, employee engagement and leadership development, the report noted. In all, 82 per cent said such initiatives contribute to higher business performance.

Some of these initiatives include developing strategic reward practices, reskilling of employees, redesigning jobs, outsourcing non-core jobs, and re-employment of older workers.

'Research has shown that the top 1 per cent of the workforce is 12 times more productive than the bottom 1 per cent,' Mr Chan said.

'Our research has also indicated that on average, engaged employees are 43 per cent more productive.'

The market assessment was based on a March survey. The firms were polled on business sentiment and salary and bonus projections for the next 12 months.