Challenges faced by Asia Pacific employers as salaries continue to grow

Challenges faced by Asia Pacific employers as salaries continue to grow

By: 
Michelle Zhu
02/10/18, 03:22 pm

SINGAPORE (Oct 2): For the first time since 2014, salary increases across 17 markets in Asia Pacific saw a mild 0.1% y-o-y rebound this year, according to the latest Salary budget Planning Survey Report (Q3) by Willis Towers Watson.  

In a press release on Tuesday, the global advisory firm says it expects the gentle upward trend to continue through 2019 due to the region’s realistic outlook for business results this year, with 60% of those surveyed expecting their company performance this year to be in line with that of 2017.

On average, 16.8% of participants said their salary increase budget is being allocated to top performance, i.e. 12.8% of employees across the region, implying that $1.44 is allocated to a top performer for every dollar allocated to an average or below-average performer.

The average annual incentive for 2018 is about 1.5 months’ base salary, which amounts to 12-13% across the Asia Pacific region.

In particular, Willis Towers Watson notes that incentives in China, Hong Kong, Malaysia, Singapore, Thailand and Vietnam were slightly higher than their peers at 1.7 months on average, while these averaged at 1.8 months for Taiwan.

Early projections for 2019 forecast higher salary increases of 0.1-0.5% from 2018, particularly in nine out of 17 markets including China, Malaysia, Indonesia, South Korea and Thailand.

Salary movements are expected to remain relatively unchanged elsewhere.

In spite of the stable business outlook, Willis Towers Watson cautions of a possible slowdown in recruitment efforts over the next 12-24 months, as only 27% of Asia Pacific organisations surveyed said they plan to add to their new headcount, lower than the 39% in the previous year.

As with the previous year’s survey results, only 7% intend to reduce their headcount, which the firms say suggests that more organisations are beginning to optimise work through automation, outsourcing and upskilling.

It also believes the lower voluntary attrition for this year’s survey (13.2%, down from the high of 15% on average) reflects improvements in how employers are redistributing and developing their existing talent pools.

Going forward, Willis Towers Watson highlights the need for a greater focus on pay equity, transparency and flexibility among employers, especially how 61% of survey participants say their pay strategies are limited by how much they can afford.

This is further exacerbated by the estimation that today’s most critical and in-demand skills could command a market premium of 10-25% above the average, and a bonus of up to 1.5 times an individual’s monthly salary.

Shai Ganu, Managing Director of Talent & Rewards in South Asia and Rewards Business Leader for Asia Pacific, says organisations can respond to this challenge by aligning their compensation strategy with urgent employee expectations around pay transparency and equity.

“Implementing successful fair-pay programmes needs two catalysts for change: (a) Strong, irrefutable fact base; (b) Personal sponsorship and commitment from top management,” he adds.

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