Salaries for highly skilled workers could boom as talent shortages take hold across Asia-Pacific, according to Korn Ferry.
Left unchecked, the salary surge could add more than US$1 trillion to annual payrolls in the region by 2030, jeopardising companies’ profitability and threatening business models.
In Thailand, a worker shortage will cost an additional $22 billion by 2020, $27 billion by 2025 and $34 billion by 2030.
“The new era of work is one of scarcity in abundance: there are plenty of people, but not enough with the skills their organisations will need to survive,” said Dhritiman Chakrabarti of Korn Ferry. “While overall wage increases are just keeping pace with inflation, salaries for in-demand workers will skyrocket if companies choose to compete for the best and brightest on salary alone.”
Korn Ferry’s Salary Surge study estimates the impact of the global talent shortage, identified in Korn Ferry’s recent Global Talent Crunch study, on payrolls in 20 major global economies in 2020, 2025 and 2030. It measures how much more organisations could be forced to pay workers, above normal inflation increases.
Based on the study, the projected labour demand figures for graduate level workers and above in Thailand in 2020, 2025 and 2030 was 5,737,900, 5,857,280 and 6,016,130.
Meanwhile, the projected labour supply figures for graduate level workers in 2020 was at 5,164,160, 2025 at 5,137,790 and 2030 at 5,054,850. This was projected to cause a 10 per cent, 12 per cent and 16 per cent labour shortage in 2020, 2025 and 2030.
The study estimates the huge impact a salary surge could have.
Japanese companies can expect to pay the most with an additional $468 billion needed by 2030.
Thai companies can be expected to pay more than $34 billion by 2030.
But smaller markets with limited workforces are likely to feel the most pressure. By 2030, Singapore and Hong Kong could expect salary premiums equivalent to more than 10 per cent of their 2017 GDP.
By 2030, China could see an additional wage bill of more than $342 billion.
India was projected to be the only economy that can expect to avoid upward spiralling wages as it will probably have a highly skilled talent surplus.
By 2030, the average pay premium, meaning what employers could have to pay the amount above normal inflation, across the region per worker is $14,710 per year.
However, Hong Kong could face a $40,539 per year per highly skilled worker, Singapore $29,065 and Australia $28,625 more by 2030.
In China the highly skilled worker shortage is expected to exceed 1 million by 2030, meaning that the wage premium could reach nearly $51 billion, higher than any other country analysed.
Dr Mana Lohatepanont, managing director of Korn Ferry in Thailand and Vietnam, said: “In Thailand, the increase in average pay premiums may have a high impact at both the macro and micro level, especially in 2030 where average pay premiums will be as high as $34 million, equivalent to 7 per cent of Thailand’s GDP in 2017.
"By 2030, organisations will see a 15 per cent surge in annual payroll compared to salary increases, and this will directly affect businesses’ bottom-line. Organisations that identify and develop employees’ skills to match their future needs will be well-positioned to enjoy financial success.”