The average forecast rate of increase in real terms in the region for 2024 is 2.2%, more than double the global average of 1%.
Real salary increases in the Asia Pacific region outperformed the rest of the world in 2023, with nine of the 12 locations experiencing the highest real salary increases in the world being in the region.
According to ECA International's latest Salary Trends Report, the average forecast rate of increase in real terms in the region for 2024 is 2.2%, more than double the global average of 1%. Looking ahead, most surveyed locations in APAC are likely to maintain or exceed their 2023 real salary growth rates in 2024, with the exceptions being Sri Lanka and New Zealand.
As a whole, the annual Salary Trends report analyses current and projected salary increases in more than 70 locations across the world.
Observed in the report, the rates of salary growth in Malaysia and across other ASEAN countries varied. In Malaysia, salaries increased by 2.1% in 2023 in real terms and are expected to grow further by 2.3% in real terms in 2024.
Meanwhile, Vietnam led the way in ASEAN in 2023 with a salary growth of 3.6% in real terms, a rate forecasted to be the same in 2024. On the other hand, workers in Laos experienced a significant decrease in salaries in real terms in 2023, with salaries falling by 23.1% in real terms due to a soaring rate of inflation of 28.1%. Salaries are forecast to continue to decrease in real terms in 2024. However, a real terms fall by a further 3.0% remains an improvement from the previous year as the rate of inflation is expected to fall substantially to 9.0%.
In Singapore, real wages fell by 1.5% in 2023 and are expected to rise once again in 2024, where workers will see an 0.5% increase in real wages.
In nominal terms, salaries for workers in Singapore increased 4% in 2023 and are projected to increase at the same level again in 2024. Still, salaries for workers fell by 1.5% in real terms due to the high rate of inflation witnessed in Singapore in 2023 of 5.5%. Nevertheless, the forecast for 2024 is a return to real salary growth with an expected increase of 0.5% in real terms..
“Singapore was expected to see a return to real salary growth in 2023,” explained Mark Harrison, General Manager, Asia for ECA International. “However, as a relatively high rate of inflation persisted, workers in Singapore are worse off this year in real terms than they were in 2022."
Looking ahead to next year, Singapore may expect to see a return to real salary growth.
Meanwhile, salaries for workers in Hong Kong in nominal terms rose 4.0% in 2023 and are projected to increase at the same level in 2024. Workers in Hong Kong have also benefited from below-average rates of inflation compared to their APAC and global counterparts, resulting in continued salary increases in real terms next year. Taking inflation into account, the real forecast salary increase in Hong Kong will be 1.7% next year — 0.1% lower than 2023.
In broader Asia, workers in China experienced a nominal salary increase of 5.3% in 2023, and this is expected to rise to 5.8% next year. Notably, China recorded the lowest rate of inflation in the region for 2023, at just 0.7%, with a forecast increase to 1.7% in 2024.
Consequently, the average salary increases in China in real terms stand at 4.6% in 2023, making it the third-highest globally and the second-highest in the region. Looking ahead, projections for 2024 anticipate a real salary increase of 4.1%, positioning it in the top three both globally and regionally.
Lastly, Japan's nominal salary increase for 2023 was recorded as the lowest in the region at 2.8%. The forecast for the following year remains modest at 3.0%, continuing to position Japan at the bottom of the regional ranking. Exacerbating this, Japan's history of very low rates of inflation seems to have ended, with inflation rates rising to 3.2% this year. Although the rate of inflation is expected to fall to 2.9% in 2024, workers in Japan will see little improvement in their real incomes by the end of next year: A decrease of 0.4% in real terms in 2023 will only be slightly offset by real salary growth of 0.1% next year.
As a whole, the top 10 forecast real salary increases in APAC are as follows:
Globally, the average salary increase in nominal terms was 5.0% this year and is forecast to remain the same in 2024. At the same time, inflation rates are expected to fall from an average of 5.5% this year to 3.6% next year. Factoring in inflation, globally salaries fell by 0.9% on average in real terms in 2023, but are expected to return to growth in 2024, where average salaries will grow by 1.0% in real terms.
Diving in deeper, Europe continues to trail other regions globally for real salary increases, where at 0.9%, salaries will grow at less than half of the 2.2% increase in real terms anticipated for employees in Asia in 2024.
All images / ECA