Strong pay increases in Asia-Pacific a result of talent scarcity?
Salaries are set to increase across most of Asia-Pacific in 2018.
The highest salary increases are forecasted for Bangladesh (10%), India (9.8%) and Vietnam (9.1%), while Japan is likely to have the lowest increase at 2% followed by New Zealand (3%) and Australia (3%).
Financial hubs Hong Kong and Singapore are both forecast to see 3.9% increases, both growing 0.2% from the 2017 predictions.
These figures are based on Mercer’s latest Global Compensation Planning Report and Total Remuneration Survey.
But as Puneet Swani, Partner and Growth Markets Career Partner at Mercer, explains, the higher wage growth across Asia-Pacific is largely due to talent scarcity and the subsequent pressure on skill retention.
“Hiring, retaining and engaging skilled talent in Asia Pacific will continue to be a top priority for companies looking to leverage the strong macroeconomic outlook for 2018. We continue to see a high level of pay increases used as a retention tool for high-performing talent,” says Swani.
“This has become even more critical, especially with the cross-industry movement of talent in specialist roles such as sales and engineering. We also find companies deleveraging pay in the wake of increased regulatory scrutiny of bonus pay outs, thereby reducing year-end bonuses and increasing base pay instead to reduce excessive risk-taking and discretion.”
In Singapore, most of the industries are expected to have a higher salary increase in 2018, with the exception of the life insurance, Internet, real estate, and banking and logistics industries. A rise in inflation could depress wage increases though, with most employers not planning to increase HR budgets in 2018.
The chemical, life sciences, and consumer goods industries are the top three in terms of the highest base pay and total cash increases for executive roles in 2017.
In terms of functions set to fetch the most increases, the legal, finance and R&D functions emerged tops.
However, even with the rebound in exports and trade, and the recent multilateral trade agreements, a significant impact on wage growth in 2018 is unlikely.