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"Why are new hires paid more than existing employees?"
A discussion prompted by a banking employee has struck a chord with workers over why new hires often get paid 20% more than existing staff, while current employees receive annual raises of just 2% to 4%.
In a post on r/askSingapore, the employee asked whether it wouldn't make more sense and be more cost-effective for companies to retain experienced "employees who already know the systems, products, stakeholders, and culture instead of paying a premium to hire externally".
The post has since drawn hundreds of comments from workers across industries who say the pattern isn't unique to banking or Singapore.
Many said companies pay market rates only when they have to
One of the most upvoted responses argued that companies have little incentive to significantly raise salaries for employees who are already staying.
The commenter said employers know most workers are unlikely to resign over a modest annual increment, making it cheaper to offer small raises while reserving larger budgets to attract external candidates.
According to the commenter, job hopping every few years remains one of the fastest ways to grow one's salary, adding that company loyalty has become less rewarding in today's job market.
Another user echoed the sentiment, saying companies are simply responding to market forces. To persuade someone to leave a stable job, employers typically have to offer a substantial pay increase that compensates for the risks of changing workplaces, including adapting to new systems, colleagues, and company culture.
Meanwhile, existing employees are often seen as less likely to leave, allowing companies to keep salary increments relatively low.
Some said external hires bring more than just experience
Others argued that the higher salaries aren't just about convincing people to switch jobs.
One commenter suggested that employees who move between companies often bring fresh perspectives, different ways of working, and experience from other organisations that can benefit their new employer.
Someone who has worked across different departments or companies may introduce new processes, identify inefficiencies, or contribute knowledge that existing teams may lack.
The commenter also pointed out that spending many years performing the same role doesn't necessarily increase an employee's value indefinitely if their responsibilities remain largely unchanged.
HR policies and salary bands may also play a role
Several users said internal compensation policies are another reason for the disparity.
They explained that many large organisations operate within salary bands, making it difficult to give existing employees large pay jumps without creating pay equity issues across the workforce.
External hires, however, can be offered salaries closer to the top of those salary bands if that's what the market demands.
One commenter added that while companies may pay more to recruit someone initially, future annual increments for those hires could become smaller if they're already earning near the top of their pay range.
It's a pattern across industries
While experiences varied, many commenters agreed on one point: this isn't a practice unique to banks or even Singapore.
Workers from industries including semiconductors, manufacturing, consulting, and the public sector shared similar experiences, saying salary growth often comes faster through changing employers than staying with the same one.
Some added that there are exceptions, particularly in highly specialised or niche roles where deep institutional knowledge is difficult to replace. But for most commenters, the takeaway was the same: staying loyal doesn't pay the way switching jobs does.
