The latest salary report by Willis Towers Watson forecasts an upward trend across Asia Pacific, with average salary increases expected to go up from 5.7% to 5.9% from 2018 through 2019.
On average, 16.8% of the salary increase budget is being allocated to top performers, which represent 12.8% of employees across the region. This implies that for each $1 allocated to an average or below-average performer, $1.44 is allocated to a top performer.
The annual incentive for 2018 averaged at 1.5 months’ base salary, which amounts to 12% to 13% across the region. Incentives were slightly higher in China, Hong Kong, Malaysia, Singapore, Thailand and Vietnam at 1.7 months on average, while it averaged at 1.8 months for Taiwan.
Out of the 17 markets surveyed, nine of them are expected to see a rise in salary to be 0.1% to 0.5% higher than that in 2018. Salary movements are predicted to remain stable in Australia, Hong Kong, India, New Zealand, Philippines, Singapore, Taiwan and Vietnam.
Digging deeper into the respective industries, pharmaceutical and health sciences remain ahead while financial services lags behind. The strong growth of the former in the region is helping to keep the sector’s salary increases ahead in most markets.
On average, 2018 median salary increases in the pharmaceutical and health sciences industry is 0.2% higher compared to the general industry, with the larger differences seen in Indonesia (0.9%), China (0.5%) and India (0.3%).
The financial services industry, on the other hand, has been facing headwinds, particularly due to intensifying competition from fintech developments, making firms more cautious with their overall spending. On average, the 2018 median salary increase in financial services is 0.3% lower than the general industry.
While the business outlook is generally stable, recruitment efforts could slow down over the next one to two years, as only 27% of Asia Pacific organisations plan to add new headcount, compared with 39% in 2018. Nonetheless, there is an increase in organisations that plan to maintain their current headcount, from 54% to 66%.
Moreover, in today’s tight labour market, the most critical and in-demand skills that organisations require from employees could lead to a bonus of up to almost twice their monthly salary. However, 61% of employers say that how they pay their employees are limited by how much they can afford.
To combat this challenge, organisations should align their compensation strategy with urgent employee expectations around pay transparency and pay equity.
“Future businesses will demand greater agility and responsiveness in organisations where people frequently change roles or move across organisations and boundaries, and work in multi-disciplinary teams to acquire and apply new learned skills and expertise,” said Willis Towers Watson’s data services practice leader for Asia Pacific, Sambhav Rakyan.