(Bloomberg) -- Singapore’s economy may be facing headwinds and inflation’s muted but companies in the Southeast Asian city-state are set to step up salary increases next year in a bid to retain staff, according to a survey.

The overall increase projected for 2020 is 3.7%, up from a 3.6% rise this year, according to Mercer LLC, which conducted the survey across industries from banking and finance to real estate. One in three companies now pay retention bonuses, up from one of four in 2017, it said.

Trade-dependent Singapore has posted slower economic growth this year amid the fall-out from the U.S.-China trade war, although the government forecasts a recovery in 2020. At present, inflation remains less than 0.5% on-year, far below the salary increases projected in the Mercer survey. Like a number of its Asian counterparts, the city-state’s workforce is aging.

“Talent pools are shrinking,” according to Mercer, which said that companies may struggle to keep workers even after offering more compensation.

There needs to be a shift toward “more holistic talent strategies that acknowledge pay as only one means of differentiation and motivation,” Kulapalee Tobing, career products leader, Singapore, said in a statement.

Income growth in Singapore has slowed this year as the labor market softened, according to preliminary data last week. The real median income of full-time employed residents weakened to 2.2% in June 2019 from 4.4% in the same period last year, the Ministry of Manpower said.

--With assistance from Abhishek Vishnoi and Nasreen Seria.

To contact Bloomberg News staff for this story: Jake Lloyd-Smith in Singapore at jlloydsmith@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Jake Lloyd-Smith, Lianting Tu

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