Salaries in Asia-Pacific set to rise 7% next year: survey

In Thailand, salaries are  expected to increase 6 per cent  in 2014, while the country’s inflation rate is projected to rise 3.1 per cent.

Salaries in China are forecast to rise 8.5 per cent and in Vietnam 11.5 per cent in 2014, before inflation is taken into account, however, after inflation is built in, both countries are set for an average 4.9 per cent increase. Elsewhere in the region, salaries in Hong Kong and Singapore are set to rise 4.5 per cent, India 11 per cent and Japan 2.3 per cent. 

The findings support the view that companies in the Asia-Pacific are finding it harder to both find and retain suitably skilled staff. One outcome of this is that more than 80 per cent of the companies surveyed say a larger portion of their salary budget increase allocation will go to high performers in 2014. Less than 1 per cent of the companies anticipate a pay freeze, compared to nearly 4 per cent in 2013. “Overall, the data for 2013 and 2014 looks very similar, so companies should be budgeting for salary increases much the same as last year. However, at the end of the day, it depends on the affordability for the company. If the company is growing at a fast rate and revenue exceeds the cost by a huge margin, it is easier to be aggressive on salary budgets than low-growth companies,” said Sambhav Rakyan, Global Data Services practice leader, Asia-Pacific at Towers Watson.

“People may say ‘it’s not about the money,’ but the reality is that base pay is the number one driver for attraction and retention globally based on the Towers Watson 2012 Global Workforce Study. However, we also believe that a well-defined employee value proposition plays a very important part too,” added Rakyan, referring to the need for companies to have a robust employee value proposition – one that articulates how an employer is unique, offers a great workplace, and why the company attracts and retains great people – to support hiring, retaining and getting the most out of staff.

Asia’s emerging economies, such as Indonesia, Sri Lanka and parts of Indochina, are the standard bearers for high-pay increases, and tend to have the highest economic growth rates (6 per cent to 8.5 per cent). But they also have the strongest inflationary pressures (5 per cent to 7 per cent, except Cambodia at 4.2 per cent) which take up much of those pay rises.

The Towers Watson’s survey looks at salary increases in various individual industry sectors, including chemical, energy, financial services, FMCG, technology, media and pharmaceutical, and a range of job levels within organisations. While the pharmaceutical sector is expected to see the biggest pay rises at 7.3 per cent on average in 2014 for the region, the retail and media sector will see raises of 5.4 per cent to 5.7 per cent, down a touch from 2013.

However, the anticipated salary rises in financial services are of particular interest because they point to a sector coming out of several years in the doldrums. Those working in the financial services sector can look forward to increases region-wide averaging 6.2 per cent, compared to 5.7 per cent in 2013. The biggest raises are anticipated in China (8.8 per cent), India (10 per cent) and Indonesia (9 per cent). The region’s major financial centres of Singapore, Hong Kong and Japan will see more modest raises in 2014 – respectively 4 per cent, 4.5 per cent and 2.3 per cent. 

“Salary increases continue to remain strong in the region due to several factors such as an increase in demand for compliance staff to meet with the increased regulations and regional expansions by local players beyond their domestic shores,” said Jeffrey Tang, director of Towers Watson’s Talent and Rewards practice in Hong Kong

“The survey showing an increase of salaries throughout Asia is a positive sign, particularly because the increases are in a wide range of industry sectors,” said Towers Watson’s managing director Pichpajee Saichuae. 

“Bearing in mind that there is a current challenge for organisations to retain skilled staff, another important issue that organisations must take into account is performance based salary and the ability to distinctly establish this pay rate difference,” he added.