2018 Asia salary forecast: What you need to know
Salary predictions for 2018 are in and according to findings from various sources, Asia is expected to experience the highest real wage growth next year.
Still, the increases are down from a year ago, in line with global inflation trends.
Rising inflation, falling increments
According to Korn Ferry’s findings, salaries in the region are forecast to increase by 5.4% – down almost an entire percentage point from 6.1% last year. Inflation-adjusted real wage increases are expected to be 2.8% – the highest globally, but this is a step below the 4.3% last year.
Most countries in the region saw a fairly steep decline in year-over-year real wage prediction increases – including Vietnam’s forecast of 4.6%, down from 7.2%, Singapore at 2.3%, down from 4.7%, and Japan at 1.6%, down from 2.1%.
“With inflation rising in most parts of the world, we’re seeing a cut in real wage increases across the globe,” said Bob Wesselkamper, Korn Ferry Global Head of Rewards and Benefits Solutions.
“The percentage of salary increase or decrease will vary by role, industry, country and region, but one thing is clear, on average, employees are not seeing the same real pay growth they did even one year ago.”
China, this same survey found, was the only country that is likely to stay consistent with wage growth at 4.2% for 2018, compared to 4% last year.
For China, the slight increase of 0.2%, however, means little when compared to the numbers recorded at the start of this decade. In fact, a study by Aon revealed that at an average of just 6.5%, Chinese enterprises are giving out the lowest salary increments since 2010.
2018: Building on the growth of 2017
Robert Walters and Mercer were both more optimistic in their overview.
“A strong economic outlook and ongoing digitalisation, as well as steady market expansion, are set to drive salaries in 2018. Local candidates with strong technical skills and international backgrounds are set to be highly sought after,” said Toby Fowlston, Managing Director, Robert Walters South East Asia.
The optimistic forecast is because despite variable economic conditions across South East Asia in 2017, the recruitment firm found that the job market there remained active.
This was largely due to the region’s dominance in attracting new market entrants and supporting the expansion of existing businesses.
The ease of doing business in Malaysia, for example, increasingly led to the growth of the shared services sector, producing higher demand for finance and accounting talent.
Similarly, against a backdrop of stable economic and political growth in Indonesia, there was strong growth across most sectors in 2017. Banking and financial services, insurance, manufacturing and FMCG, in particular, performed well, and the fastest expansion was seen in professional services. Companies operating in these growing sectors were active in seeking quality candidates.
Likewise, an influx of multinational firms and continued growth of local and fast emerging businesses resulted in strong demand for high-potential talent in the Philippines. Businesses establishing themselves in the country were keen to gain greater market share, resulting in back office talent in HR and finance being in high demand.
Singapore, on the other hand, saw the most conservative hiring levels out of all ASEAN countries, due mainly to increased offshoring, nearshoring and cost-cutting initiatives, specifically within the banking sector. However, there were still key pockets of active hiring within the information technology and sales and marketing sectors, along with a growing contract market.
Mercer did not provide pay predictions, but said the overall hiring outlook will be positive, with five out of 10 companies across the region looking to maintain headcount.
Still, hiring sentiment is often, therefore, a reflection of trends in staff turnover in certain countries and industries. The flipside of higher GDP growth and base pay increases though is that the staff turnover is higher.
Technical skills will be compensated most handsomely
It’s been a mixed bag, prediction-wise, but one thing’s for certain in 2018: Specialised technical skills will remain in hot demand, and will be most well-rewarded.
In Singapore, for example, a majority (92%) of Chief Information Officers (CIOs) plan to attribute salary increases to an average of 15% of their IT staff in the next 12 months. This would put the average pay increment of IT workers there at 6.8%, well above the national average of 4%.
“While wage growth in Singapore has remained steady over the past several years, Singapore’s IT leaders need to understand the value remuneration has in retaining their top performing talent,” said Matthieu Imbert-Bouchard, Managing Director of Robert Half Singapore.
“The city-state’s IT workers operate within a limited talent pool, are acutely aware of their market value and with highly sought-after skills are more inclined to leave an organisation if they are offered a more attractive remuneration package elsewhere.”
The situation is similar in China. Robert Walters forecasts that Chinese technology professionals are likely to receive a whopping 12-18% pay rise.
This year, China continued its growth momentum bolstering confidence and hiring activity. Digital, IT, financial technology and e-commerce skill sets will continue to be in demand due to the national “Internet Plus” strategy and companies’ digital transformation projects in 2018.
Certainly, with the ongoing transformation, HR professionals with change management experience will also be in demand.
“Those with proven ability in cultural transformation will be sought after in 2018 as companies undergo further cultural and structural change,” said Fowlston.