Covid-19 crisis eats into corporate pay rise budgets: report
One-third of Asia Pacific employers have cut their pay rise budgets due to the Covid-19 crisis while others have frozen or postponed salary increases this year, according to Willis Towers Watson, a leading global advisory, broking and solutions company.
Its latest "Salary Budget Planning Report", covering 3,800 employers across 22 markets in Asia Pacific, shows that one-third of companies (34 per cent) have made changes to their employees’ salaries in response to the Covid-19 crisis. Another 29 per cent of employers are planning or considering actions to manage labour costs or incentivise those who are required to work.
Among those companies that have reviewed salaries, the proportion of those planning a salary freeze this year is six times higher than before the pandemic (23.5 per cent in 2020 vs 5.1 per cent in 2019), while the proportion of companies postponing a salary increase is almost five times higher (13.4 per cent in 2020 vs 2.4 per cent in 2019), the report said.
Compared to last year, 62 per cent of companies plan to continue with their regular review of salary increases for their employees this year (vs 91.4 per cent in 2019).
Pay rise projections for 2021 are more optimistic as employers in Asia Pacific anticipate that salary budgets will bounce back closer to pre-Covid-19 levels at an average of 5.8 per cent next year, the report predicted.
Emerging markets such as Bangladesh, India, Indonesia, Myanmar, Sri Lanka and Vietnam are projecting a stronger rebound of salary increases, indicating strong confidence in the recovery of their economies.
In recent years, the fintech industry has been leading the transformation of traditional financial services companies. From enabling financial transactions to be carried out remotely to facilitating contactless payment and the distribution of government aid during the pandemic, fintech companies have been crucial in supporting the battle to curb
Covid-19 infections in many countries. This has kept the sector’s salary increases ahead in most markets, the report said.
On the other hand, the report shows a decreasing salary budget in the energy and natural tesources industry. The Covid-19 outbreak coupled with the oil price crash and the economic recession present an enormous challenge for the sector, which leads to a lower projected salary budget for next year (3.7 per cent in 2021 vs 4.4 per cent in 2020),
“In the next 12 months, organisations are likely to create more jobs in functions such as sales, engineering and information technology. Compared to last year, job opportunities in IT functions have exceeded technical skilled trades, a reflection of the increased digital transformation of businesses," Edward Hsu, business leader, rewards data and software, Asia Pacific, Willis Towers Watson, said.
"In addition, we are seeing more companies putting a greater emphasis on their IT resources and departments. This could be due to the increased focus on their IT infrastructure caused by the prevalence of remote working adopted by companies as a result of the pandemic, leading to a rise in demand for more jobs in this function,” Edward added.
