Salary budgets are expected to rise at a faster rate in 2018 in most markets across Asia Pacific region. Recent study conducted by Willis Towers Watson revealed that India, China, and Vietnam will lead the way, followed by the more developed markets.
According to its Watson’s 2017 Asia Pacific Salary Budget Planning Report released on Thursday (Dec 14), salary budget is projected to grow at 6.1 percent across 21 markets in the region, an increase from 5.9 percent in 2017. Next year salary increases will reflect expectations for steady economic growth in Asia Pacific, with the pickup arresting two years of slowdown.
While the survey looks at salary budget predictions, Willis Towers Watson research suggests that actual budgets might be lower than projected. In its 2018 Pay Review Planning Webinar, 34 percent organisations indicate that they plan to under-spend their budget, while the other 52 percent said their actual and planned budgets were about the same.
Nine Asia Pacific markets are expected to see increase in salary budgets, while the other twelve markets will remain stable. South Asia will lead the way in 2018 salary budget increases, with India seeing up to 10 percent increases on average. But considering India’s inflation rate, the increases in real terms are seen at 5.3 percent down from 5.6 percent in 2017.
Sambhav Rakyan, Willis Towers Watson’s Data Services Practice Leader for Asia Pacific, said that rapid evolution of jobs, skills, and the future of work will require companies to rethink their talent attraction and retention strategies, especially if they want to draw the brightest talent in the tech sector.
Mr Rakyan stated that merely increasing compensation is not a sustainable solution. More importantly, he suggested, employers need to leverage employee benefits while ensuring greater transparency in compensation and benefits-related communication.
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Besides India, Vietnam and China will also see the highest salary increases in real terms next year, with 5.7 percent and 5.1 percent respectively. However, Asia’s other developing market with a large population, Indonesia is set to standout too. Across Asia Pacific, Indonesia will see the largest decline in real increases in 2018, only grow 2.8 percent compared to 3.9 percent in 2017.
Additionally, other developed markets of Hong Kong, Singapore, Australia, Japan and New Zealand are projected to see the lowest overall salary growth. Australia and New Zealand’s salary increases are both forecast at 3.0 percent, which means the salary will rise at t 1.1 percent and 1.2 percent respectively in real terms.
Japan’s will remain the lowest at 2.3 percent on average, or 1.7 percent in real terms. Meanwhile, salary increases in Hong Kong and Singapore are both expected to average at 4.0 percent, but accounting for the inflation rate, this will lower the average to 1.7 percent and 2.4 percent respectively.
The report stressed that the issue of pressure points in terms of talent scarcity is evident across 19 industries covered in the study. The pharmaceutical and health sciences sector and the high-tech sector are expected to see salary budgets rise 6.1 percent in 2018, the highest of the industry sectors covered. Additionally, those in the leisure and hospitality sector will see the lowest increases at around 3.9 percent across the markets covered for this particular industry.
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