India is expected to see some of the region’s biggest salary bumps next year. (USD)
SINGAPORE: Workers in Asia are set to see bigger salary bumps in 2023 as persistent inflation and a labour crunch put upward pressure on pay, recent studies show.
From India to Vietnam, employers have been compelled to enhance compensation packages or risk losing talent to rivals. Expected pay hikes are also on track to beat inflation forecasts for 2023, providing hopes for real income growth in Asia after living costs surged this year.
Median salary increase budgets across industries next year are forecast at 6.8% for Indonesia, 5.1% for Malaysia, 6% for the Philippines, 4.7% for Singapore, 5.1% for Thailand and 7.9% for Vietnam, according to New York Stock Exchange-listed services company Aon. All figures exceed 2022 rates except for Malaysia’s, which is flat.
These projections emerged from a survey released this month, in which Aon polled more than 700 companies across the Association of Southeast Asian Nations about pay changes and turnover rates.
The study stressed that while inflation plays a significant role in driving salary changes in the Asean bloc, the shifts are also driven by supply and demand in the talent market, with high attrition rates this year putting pressure on employers to boost compensation to ease hiring and retention.
“Companies must define their 2023 salary increase approach in the context of the competitiveness of their current salary levels,” said Rahul Chawla, head of human capital solutions for Southeast Asia at Aon. “While it is critical for businesses to define and adapt pay for different worker types and the nature of the work, organisations must stay agile as they rethink their pay principles.”
Results of a survey by consultancy Mercer released last month also found signs of rising pay hikes next year. Across markets in the Asia-Pacific region, companies were forecasting an average 4.8% increase in overall salaries in 2023 – a slight jump from 4.6% in 2022, Mercer’s Total Remuneration Survey revealed.
Mercer’s findings, however, showed differences among countries. India had the highest projected salary increase for next year at 9.1%, while Japan, at 2.2%, had the lowest. Still, both figures were slightly higher than this year, when India’s rate was 8.79% and Japan’s 2.14%.
Mainland China, at 5.38%, was the only market projected to see a slight decrease in 2023, from 5.4% for 2022, as Asia’s largest economy struggles with a sluggish growth outlook. Hong Kong’s salary hikes next year were projected at 3.71%, over this year’s 3.55%, Mercer’s study showed.
In a majority of the cases, Mercer’s survey also showed that pay increase expectations in the region outpace inflation rates forecast for 2023. For instance, the survey projected inflation next year at 5.1% for India, 1.4% for Japan, 2.2% for mainland China and 2.4% for Hong Kong.
While the forecasts promise relief for workers concerned about climbing costs, some may be looking for more. Recruitment company Robert Walters showed in its Global Salary Survey released last month that people moving between jobs can expect a salary increase of 15% to 20% – and as high as 40% for those with specialised tech skills.
In Singapore, the report showed that 80% of employees were likely to request more pay, while 71% expected employers to consider the rising cost of living when evaluating pay rises or bonuses over the next 12 months.
Robert Walters surveyed 316 candidates and 105 companies in Singapore during September, finding that over 78% of workers polled were willing to consider changing jobs next year should their pay raises be lower than the inflation rate. Salaries, however, may not be the only issue.
“For many candidates, money is no longer the only factor when they make career decisions,” said Monty Sujanani, country manager at Robert Walters Singapore. “We have observed that when employees feel burnt out, or bored because they are not learning anymore, this compels them to look for other opportunities.”
