SALARY FORECAST CHINA COMPENSATION & BENEFITS HAY GROUP
China - Employees in China will be enjoying higher than expected salary increases in 2010 as most companies are cautiously confident of their business prospects next year.
According to global management consultancy Hay Group's 2009 compensation survey of more than 150,000 employee records, the salary increase forecast for China in 2010 is optimistically set at 6.8%. This is a significant increase from the 5.3% recorded over the last 12 months. Furthermore, only 10% of companies polled plan to freeze pay next year, compared to 30% of respondents who froze salaries in 2009. That said, one third of respondents have yet decided on their 2010 budgets.
While all industries have predicted higher increases than the figures given in 2009, only oil and gas and pharmaceutical sectors are the most optimistic about their business prospects in 2010. They have predicted higher than average salary increases of 9.7% and 9.1% respectively.
However, with CPI (consumer price index) forecasted to be around 1.4% in 2010, the real wage inflation, which is actual salary movement minus CPI, will be at 5.4%. This means the real wage inflation during 2009 to 2010 would be slightly higher compared to figures recorded in 2007 (4.3%) and 2008 (3.9%). Hence, there is a possibility of salary increment figures being lowered due to decreasing CPI and the poor economic situation.
But companies in China are still seeing the value of using pay increments to attract talent. The study revealed that middle and junior management employees are enjoying higher salary increments compared to their senior executives and clerical colleagues in 2009. Companies polled said it was necessary to do so because of the lack of talent at these levels.
Nonetheless, Huxley Liang, head of rewards practice and vice president of Hay Group China, believes companies will be stringently tying pay to performance and business objectives due to smaller salary budgets. "The interesting thing to observe for the coming years is whether companies will retain this pay for performance discipline when the economy recovers and high rates of job churn re-emerge."
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