Businesses across Asia Pacific have reduced pay rise budgets this year, as part of efforts in responding to the economic implications of the COVID-19 crisis.
According to Salary Budget Planning Report conducted by Willis Towers Watson, about one-third companies (34 percent) have made changes to their employees’ salaries in response to the COVID-19 crisis. Another 29 percent of employers are planning or considering actions to manage labour costs or incentivise those who are required to work.
“It is no surprise to see that many companies have reduced their salary budgets. Most businesses around the world are in cash preservation and cost optimisation mode. Here in Asia Pacific, 49 percent of companies have already taken hiring or restructuring actions. Although companies are now stabilising their businesses, the full extent of the economic impact of the pandemic is yet to play out. Companies are extremely cautious and have rapidly adopted various strategies to protect their business as the sustained recovery will be gradual and slow in most markets.
The pandemic is also forcing employers to rethink virtually every aspect of how work is being done, the type of talent they need and how to reward this work as they transform their businesses. Companies should review their business priorities and talent requirements to prepare for next year, especially if they need to re-allocate resources and salary budgets to the changing business environment and objectives,” said Edward Hsu, Business Leader, Rewards Data & Software, Asia Pacific, Willis Towers Watson.
The report also showed a glimpse of hope for pay rise in 2021. At an average of 5.8 percent, pay rise for next year are more optimistic as employers in Asia Pacific anticipate that salary budgets will bounce back closer to pre-COVID-19 levels. Emerging markets such as Bangladesh, India, Indonesia, Myanmar, Sri Lanka and Vietnam are projecting a stronger rebound of salary increases, indicating a strong confidence in the recovery of their economies.
The survey also found that companies in the Fintech, High Tech, Pharmaceutical and Healthcare sectors are planning to increase their salary budgets next year due to the brighter business outlook in these industries.
|Salary increase by industry||2020 (actual)||2021 (projected)|
|Pharmaceutical and Health Sciences||5.3%||5.4%|