China to lead Asia Pacific in salary hike: Survey

business July 01, 2014 00:00

By The Nation

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Salaries across Asia-Pacific are set to rise an average 6.9 per cent in 2014, with China leading the way while Japan is expected to see no increases, after allowing for inflation according to a survey conducted by professional services company Towers Wats

Thailand is expected to see a 5.4 per cent increase, in light of political condition.
Region-wide salary increases forecast for 2014 are similar to that in 2013, and down from an earlier forecast in September 2013 of 7.1 per cent. 
The Towers Watson 2013-14 Asia-Pacific Salary Budget Planning Report drew on approximately 2,000 sets of responses covering 18 countries in the Asia-Pacific region. The survey included about 400 different companies, some of which responded for multiple countries where they have a presence. The survey was set against a regional backdrop of annual inflation little changed from 2013 at 4.1 per cent, stronger economic growth, and a decline in the overall unemployment rate.  
Salaries in China and Cambodia are forecast to rise 8 per cent before inflation is taken into account – after inflation is built in, average increases are forecast at 5.2 per cent and 4.1 per cent respectively. Elsewhere in the region, salaries in Vietnam are set to rise 11.5 per cent and Indonesia 9.6 per cent, while salaries in Hong Kong and Singapore are forecast to go up 4.5 per cent and 4.3 per cent respectively, Pakistan (13 per cent) and India (10 per cent) are expected to see the biggest increases, while New Zealand (3 per cent) and Japan (2.3 per cent) will see the lowest. 
“A 5.4 per cent increase for 2014 for Thailand is expected and we anticipate downward bias throughout the year in the midst of the prolonged political situation,” said Pichpajee Saichuae, Managing Director of Towers Watson Thailand.
“Companies will have to proactively allocate the limited budget to high performers to make sure investment and retention pay focus is provided to their key talent. In fact, about 9 per cent of Thai companies are allocating their entire budget to high performers; this is the highest percentage amongst the Southeast Asian countries. With the prolonged crisis, companies will be more conservative on hiring workers and we are already seeing lower employment demand in export oriented sectors such as manufacturing and tourism related areas like hospitality and retail services,” added Pichpajee.
“In most cases, we’ve revised our salary forecasts modestly lower from our forecasts back in October 2013 mostly because clients now have a much better sense of the 2014 actual budgets and inflation is expected to be lower than previously thought,” said Sambhav Rakyan, Data Services practice leader, Asia-Pacific at Towers Watson. 
  Inflation across the region in 2014 is forecast at 4.1 per cent , unchanged from 2013, but down from an earlier forecast of 4.2 per cent.
The findings support the view that for companies in Asia-Pacific finding and retaining suitably skilled staff remains a challenge. 
“The expected raises for production or blue-collar workers in China, Hong Kong, India, Indonesia, South Korea and Thailand show growing pressure to find such staff.” said Rakyan. “We hear from large-scale employers – often manufacturers – in these markets that staff hiring and retention is a constant challenge.” 
In other markets, such as Malaysia, the Philippines and Vietnam, higher increases are expected in the ranks of the middle management, reflecting the relative shortage of that skills mix in those markets.