Real Salary Increases in Singapore Forecasted to be Lower in 2020, But Remains Among the World’s Highest

November 11, 20195:04 pm75 views
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The average real salary increase for workers in Singapore is forecasted to be 3.0 percent above inflation in 2020, a slight drop from the 3.3 percent increase that was seen in 2019.

Despite a nominal increase of 4.0 percent, employees will see an average increase of 3.0 percent after factoring in the predicted inflation of 1.0 percent.

“Although the forecasted real salary increase is set to be slightly lower in 2020 than the 3.3 percent Singapore employees saw in 2019, they will still see a larger increase than their regional neighbours such as Hong Kong, Taiwan and Japan,” said Lee Quane, Regional Director – Asia at ECA International. “The notably low level of inflation that Singapore has seen over the recent years, coupled with a tight labour supply and talent restrictions due to immigration constraints, implies that salary increases will remain relatively high.”

The annual Salary Trends Report analyses current and projected salary increases for local employees in 68 countries across the world.

Asian nations dominate the top 20 once again

Asian nations lead the way again for salary increases – 13 out of the top 20 increases in real salaries have been observed in Asian countries, occupying the top five spots in the global rankings.

Quane said, “Once again, the vast majority of the highest real salary increases in the world are predicted to be seen in Asia. The average real salary increase in the Asia Pacific region is forecasted to be 3.2 percent, which is significantly higher than the global average of 1.4 percent and nearly three times the European average of 1.1 percent. This is a trend that we have seen for many years now due to low inflation and rising productivity in many Asian economies, resulting in the rapid growth of salaries compared to other regions.”

The emerging economies of Vietnam and Thailand both saw significant real salary increases, placing them in the global top five, with increases of 5.1 percent and 4.1 percent respectively.

“Workers in Vietnam and Thailand will both see further increases to their salaries as the nominal salaries expected to be given by employers stay well ahead of the low levels of inflation that these countries will see in 2020. This has been a long-term trend for both countries, as productivity continues to grow and inflation is controlled,” explained Quane.

Similarly, the real salary increase in China is again expected to be above the regional and global average at 3.6 percent.

Quane said, “Although there are signs that the Chinese economy may be slowing down in the face of the ongoing trade war with the US, wages and salary increases are still holding firm. China has also maintained its place in the global top 10 for salary increases.”

However, not all workers in emerging Asian economies will benefit from an above average salary rise after inflation. Workers in Malaysia are expected to see a big drop in their real salary increases compared to previous years, down to 2.9 percent from 4.0 percent in 2019.

Despite the forecasted nominal salary increase staying at 5.0 percent, inflation in Malaysia is expected to rise from 1.0 percent to 2.1 percent which will reduce the rate at which salaries increase in real terms for workers in the country. Although it is still relatively high, the predicted lower real salary rise for workers compared to 2019 has seen Malaysia drop out of the global and Asia Pacific’s top 10,” explained Quane.

See also: Salary Increases in Asia Pacific remain Stable at 5.6% in 2020: Survey

Hong Kong will see higher salary increase than 2019, but still among the lowest in Asia

Despite a nominal salary increase of 4.0 percent, workers in Hong Kong will only see an average increase of 1.4 percent in real terms even after considering the forecasted inflation of 2.6 percent – this represents one of the lowest increases in the Asia Pacific region.

Quane said, “Despite nominal salary increases staying at 4.0 percent next year, the predicted drop in inflation from 3.0 percent to 2.6 percent implies that employees in Hong Kong will see a slightly better overall salary increase in real terms this year. Although this is still lower than the overall average in Asia Pacific, the fact that the nominal increase will remain at 4.0 percent in 2020, as it was last year, is surprising given the backdrop of the current economic situation in Hong Kong. However, this underlines the fact that many companies in Hong Kong need to continue to attract and retain staff even in this period of economic adversity for the city.”

Workers in India and Pakistan see contrasting fortunes

India once again dominates the rankings for average real salary increases in Asia, but now also tops the table globally in 2020 as well. The average real salary increase is set to be at 5.4 percent for workers in India.

“Salaries in India are expected to rise significantly – almost four times as high than the expected increase in Hong Kong. Despite inflation rising slightly from 2019 and the economy slowing, employees in India can expect to see another bumper increase to their salaries. However, unless growth picks up again, a salary rise of this scale may not be sustainable in the longer term,” said Quane.

Meanwhile, their neighbour Pakistan are predicted to experience a different scenario in 2020, as they are the only nation in Asia Pacific predicted to see a decrease in their real salary.

Quane explained, “The average real salary increase in Pakistan is forecasted to be -3.0 percent, meaning that employees will be worse off than they were last year. Despite the nominal increase staying at a relatively high 10.0 percent, inflation has shot up as the rupee has depreciated. Inflation in Pakistan is forecasted to reach 13.0 percent in 2020, exceeding the nominal increase and leaving workers out of pocket compared to 2019.”

Argentina remains bottom of the table

Argentina remains firmly at the bottom of the table, with real salaries forecasted to decrease by 22.0 percent, as the economic situation in the country worsens.

Quane said, “The nominal salary increase for Argentina has stayed at a whopping 29.0 percent, the same as last year. However, with inflation significantly higher at an alarming 51.0%, this means that there will be another significant decrease in real salaries for employees in Argentina. Although President Macri and his government have now been replaced by their populist rivals in a recent election, the outlook for Argentina does not look promising and it is likely that the economic situation will get worse before it gets better.”

Middle Eastern nations tumble in the rankings

Saudi Arabia saw the biggest real increase in salaries in 2019 but is expected to plummet in the rankings in 2020. Real salary increases are forecasted to reach 2.4 percent on average – a long way short of the 5.8 percent increase that was seen in 2019.

“Inflation has risen significantly throughout the Middle East as the stable commodity prices boost domestic demand. This has seen Saudi Arabia, the United Arab Emirates and Qatar all drop out of the global top 10 as rising inflation cuts into the real salaries of workers in the region,” explained Quane.

Top 10 forecasted real salary increases in 2020 – Global

Country2020 global rankingForecasted real salary increase for 20202019 real salary increase
India15.4%5.6%
Vietnam25.1%4.0%
Indonesia34.6%3.8%
Cambodia44.2%3.8%
Thailand=54.1%3.9%
Ukraine=54.1%1.7%
Philippines73.7%2.9%
China=83.6%3.7%
Korea Republic=83.6%4.0%
Bangladesh103.4%2.5%

Read also: Job Security, Salary and Work-life Balance Top Priority for Workers in Singapore