Higher salary hikes expected across Asia-Pacific in 2017
However, Mercer's annual remuneration survey noted that the pay growth also signals increased hiring caution among multinationals in the region.
Most of Asia-Pacific’s economies are forecasting higher salary increases in 2017 than 2016.
The highest salary increases next year are forecasted for India (10.8%) and Vietnam (9.2%), Mercer’s annual Total Remuneration Survey revealed.
Developed economies Singapore and Hong Kong are expected to see a 4.1% and 4.2% increase in wage levels respectively.
Japan, New Zealand and Australia, however, are predicted to receive the lowest increase of less than 3.0% each.
More notably, real wage growth has also been steadily rising in the region, often reaching double digits in emerging markets despite inflation being at its lowest for most countries.
Across industries, the life science and chemical sectors are projected to see the biggest salary raises in the region.
However, the survey noted that the pay growth signals increased hiring caution among multinationals in the region as they are focusing on paying existing talent more rather than increasing hiring.
Similar to last year, the survey again revealed a worrying double-digit turnover rate in almost all Asia-Pacific countries, with the exception of Japan and New Zealand.
Voluntary turnover rates also continue to increase year-on-year.
These rising numbers represent a challenge in replacement costs in the form of higher salaries for new joiners, recruitment costs and lost production, all of which adversely impacts overall cost of operations and margins that are already under close scrutiny.
Almost of companies in Asia surveyed reported facing difficulty filling vacant positions, as compared with 38% of companies globally.
With turnovers rising, increasing pay as a retention strategy remains key, said Puneet Swani, Partner and Growth Markets Talent Leader at Mercer.
“Changing business models and restructuring in the financial services has meant that the sector may not be hiring at rates seen in the last three years, but we continue to see highest level of pay increases as retaining high-performing talent has become even more critical,” said Swani.