Asia Pacific Salary Levels Increase Minimally in 2015

July 10, 20155:53 pm1002 views
Asia Pacific Salary Levels Increase Minimally in 2015
Asia Pacific Salary Levels Increase Minimally in 2015

Asia Pacific salary levels have increased minimally in 2015, but continue to be remarked low by 10 percent than pre-financial crisis. Mercer’s annual total remuneration survey forecasts average salary increase of 7.3 percent in 2015 as in comparison to 8.1 percent in 2008.

Mercer, a global consulting leader in advancing health, wealth and careers predicts emerging markets in Asia Pacific to continue to lead the world in terms of real wage growth, as in comparison with developed markets in United States and Europe that show a 20%-30% drift.

Figure 1: Pay increase


Salary increases in some emerging markets such as Vietnam, Indonesia and India continue to remain at double digits or high single digits, but the real wage growth in these markets continue to remain low due to high inflation rates in these countries. The real wage growth is measured as salary increases minus inflation rate.

For example the salary increase forecast for Indonesia for 2015 is 9.4 percent, however the real wage growth is only 2.2 percent, as the forecasted Inflation rate (CPI rate) is 7.2 percent for 2015. The minimum wage in countries like China, Indonesia, Thailand and Vietnam has continued to rise at a compounded rate of 12-13% every year over the last three to four years.

Salary increases for 2015 are expected to be higher than inflation across Asia Pacific, resulting in positive real wage growth in the region.  “While real wage growth is good news for emerging markets, on a percentage basis, absolute salary levels are still low in these countries, compared to more developed markets,” said Puneet Swani, Partner, Information Solutions & Rewards Practice Leader – Asia, Middle East and Africa at Mercer.

The doubt-digit turnover rates in almost all Asia Pacific countries, with the exception of Japan and South Korea is one among the many worrying factor for employers in this region. Despite the recent stabilization in voluntary turnover rates, the rising numbers represent a major challenge in terms of replacement costs in the form of higher salaries for new joiners, recruitment costs and lost production, all of which negatively impacts overall cost of operations and margins that are already under close scrutiny.

After a gap of three years, the industry is seeing change in hiring intentions across Asia Pacific. Swani added, “The consistent hiring which had continued unabated over the past three years has begun to slow down. Although four or five companies out of ten are still looking to increase headcount, especially in emerging economies, this number has decreased from six to seven in the past few years. Sales and marketing, technical/engineering and, finance & accounting functions continue to lead the pack in terms of where maximum hiring is happening.”

The technology industry was revealed to have the lowest salary increase forecast for 2015 in eight out of 14 countries in the region, as compared to major industries. While forecasts for the life science industry show the highest salary increases in seven out of 14 countries, according to the survey.

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