Pay rises are making a comeback, the latest survey commissioned by Willis Towers Watson finds. As businesses are recovering from the economic downturn during the pandemic, companies in the Asia Pacific (APAC) plan to give their employees larger rises next year.
According to the Salary Budget Planning Report, markets in APAC will see the highest 2022 salary increases, while countries in North America and Western Europe are expected to stay flat, and the rest of the regions taking longer to recover and stabilize. As a fast-growing region, companies in APAC are projecting average salary increases of 5.3% for executives, management and professional employees, and support staff next year. This is up from the average 4.9% increases employees were granted this year. Emerging markets such as India at 8.8% and Indonesia at 6.5% are forecasting significant salary budget increases for 2022 compared with this year.
With APAC expected to perform better than the rest of the world in trade, the overall manufacturing output across the region has also shown substantial recovery. In addition, the pandemic has produced accelerated growth and enormous demand for wireless communication. Strong foreign direct investment into the region along with the demand for technology, communication and 5G equipment, have created new demand and job opportunities across the High Tech and Media industries. High Tech companies in the region are projecting the largest increases (5.5%) followed by Manufacturing (5.4%), Pharmaceutical and Health Sciences (5.2%) and Media companies (5.2%).
Commenting on the survey findings, Edward Hsu, Business Leader, Rewards Data and Software for Willis Towers Watson Asia Pacific said, “Many businesses awarding high salary increases are also acknowledging and rewarding their employees who have demonstrated resilience throughout the pandemic. Although there is a positive outlook among businesses, companies are also monitoring the inflation trend as it looks set to increase in several markets in APAC. Organisations may further adjust their 2022 salary budget forecast in the later part of this year.”
Higher salary rises in 2021 are partially attributed to few companies freezing pay increases compared to last year. In 2020, an unprecedented number of companies cancelled salary reviews (30%) in APAC, whereas in 2021, the figure dropped to 13% and is forecast to return to the low level of 2.5% next year. Notably, rises are returning to close to pre-pandemic levels. The larger rises coincide with a surge in demand for labour and a shortage in supply of specific professional roles with premium skills.
Companies are also going through extensive planning in 2021 and will be experimenting with hybrid models that better fit employees’ lifestyles, which may also result in long-term business savings. The buoyant job market and the challenge of engaging employees outside of an office environment mean that companies will need to pay top dollar to hold on to their top talent.
With the recovering environment in many markets, attrition rates have also moved up in those with positive business outlooks, including Australia, China, Singapore, Taiwan and Vietnam.
“Attracting and retaining employees remains a major challenge for employers. In fact, the current environment makes these challenges even more difficult. Employers need to deliver a sound employee value proposition supported by comprehensive Total Rewards programmes. Beyond competitive salaries, which are table stakes at the moment, companies also need to focus their spend on a diverse set of benefits, wellbeing and upskilling programmes to drive employee engagement,” added Edward.