ASIA PACIFIC, 28 May 2015 - Salaries across Asia Pacific will rise 7% in 2015, according to the 2015 Asia Pacific Salary Budget Planning Report, released today by leading global professional services company Towers Watson (NASDAQ:TW). While this is in line with 2014, it represents a significant jump in real terms, owing to lower inflation in 17 of the 19 Asia Pacific economies examined in the survey.
In real terms, average salaries are set to rise 4.3% in 2015, compared to 3.3% last year. In East Asia, the highest increase is seen in mainland China (7.4%), while Hong Kong will see the smallest (1.3%). In 2016, nominal salary increases across the region are projected to dip slightly to 6.7%. The survey looks at a range of industry sectors and job grades from factory shop floor to executive suite.
"This is good news for employees, who are finally seeing the results of the post-financial crisis pick-up in economic growth and in receiving more cash in hand," said Sambhav Rakyan, Data Services practice leader, Asia Pacific at Towers Watson. Mr. Rakyan added that with the oil price bottoming out, the sharp fall seen last year will start to work its way out of the inflation calculation. Thereafter, it may go back up. “Companies may want to allow for such a recovery when budgeting for 2016, despite the current lower inflation rate,” he said.
Singapore and HK Salary Raises Nominally Equal; HK Far Behind in Real Terms
Hong Kong and Singapore are both set for overall increases of 4.5% in 2015, unchanged from 2014. However, after inflation, Singaporean employees will see far more of that increase. In real terms, salaries will rise 1.3% and 4.4% respectively.
"The Singapore government has been sticking to a tight monetary policy to keep the lid on inflation. Its policy to stabilize property prices has also helped curb inflationary pressures," said Mr. Rakyan. “In Hong Kong, at least employees will receive higher real increases than last year (0.1%) thanks to a modest fall in inflation.”
Salary increase budgets for 2016 in Hong Kong and Singapore are forecast to rise 4.6% and 4.5% respectively.
Top Performers Get Higher Salary Increases
The study found that across all industries, almost 80% of respondents said they plan to allocate a larger portion of their budget to high performers. A similar trend is seen in the three core industries in the survey - financial services, technology and healthcare/pharmaceutical.
"Our survey showed that 80% of respondents will hire new employees in the next 12 months, suggesting a sunny outlook for employees in the region," said Mr. Rakyan. “However, the greatest rewards go to the top performers, who are seeing salary increases of approximately one and a half times that of average performers. In the current war for talent, creating a strong linkage between pay and performance is critical if employers want to retain high performing employees.”
Predictably, in the markets where overall salary increases tend to be higher, good performance is also better rewarded. In India, increases for the highest-performing employees average 12%, nearly twice the regional average.
Mr. Rakyan commented: "The aggressive pay increases for high performers shows how urgently companies, especially in emerging markets, are focused on recruiting and retaining top talent. Given the talent shortage is becoming more acute, companies are carefully evaluating their spending."
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Projected salary budget increases for selected markets with the local inflation rates (salary budget increase figures include promotions and zero salary budget increases). Macroeconomic data source: Economist Intelligence Unit (EIU) – Figures as at February 2015
About the Survey
The 2015 Asia Pacific Salary Budget Planning Report is a bi-annual survey compiled by Towers Watson's Data Services Practice (TWDS). The survey, timed to coincide with companies’ compensation planning for 2015, looks at a range of industry sectors and job grades from factory shop floor to executive suite, and focuses on salary movement and review practices.
The survey was conducted in February 2015. Approximately 2,000 responses were received from companies across 19 countries in Asia Pacific. Click the link to purchase the latest Salary Budget Planning Report online.