A total of 13 out of the 20 markets have decreased their average 2021 pay increase forecasts, with India noting the highest drop of the lot; employers in Singapore foresee an average salary increase of 3.5%, on par with peers in Hong Kong and Taiwan.
Employers in Asia Pacific are projecting salary increments to be at an average of 5.3% this year, as the region continues to navigate the COVID-19 pandemic.
According to Willis Towers Watson's latest Salary Budget Planning Survey report, companies were forced to revise their pay rise budgets downwards in 2020, leading to an average increase of 5.4% that year (vs 5.6% of actual salary increase in 2019).
A total of 13 out of the 20 markets have decreased their average 2021 pay increase forecasts, with India noting a 1.1% decrease in forecast (from 9% in 2020 to 7.9% in 2021), the highest drop of the lot.
While this was so, the lowest salary increase forecast comes from Japan, at 2.2%.
As for Singapore, employers in the city-state foresee an average salary increase of 3.5%, on par with employers from Hong Kong and Taiwan.
Overall, the projected salary increases per market in 2021 are as follows (from highest to lowest projection):
- Bangladesh: 8.0%
- India: 7.9%
- Vietnam: 7.7%
- Myanmar: 7.0%
- Indonesia: 7.0%
- China: 6.0%
- Sri Lanka: 5.7%
- The Philippines: 5.6%
- Cambodia: 5.5%
- Thailand: 5.0%
- Malaysia: 4.7%
- South Korea: 4.1%
- Singapore: 3.5%
- Taiwan: 3.5%
- Hong Kong: 3.5%
- Macau: 3.1%
- Australia: 3.0%
- New Zealand: 2.9%
- Brunei: 2.8%
- Japan: 2.2%
Apart from the above, the report also found a 'significantly larger' pay gap between executives and production labour in the emerging markets.
In Indonesia, Malaysia, the Philippines, Thailand, China, and India, the ratio of executives' pay recorded was at least 25 times greater than that of the average worker; while in markets such as Singapore, South Korea, Australia, Hong Kong, Japan, and Taiwan, the pay gap between executives and workers was less than 15 times for the actual total compensation.
Commenting on this, Edward Hsu, Business Leader, Rewards Data & Software in Asia Pacific at Willis Towers Watson, said: "In emerging markets, many companies are in fast-growth businesses where organisations need to build strong executive and leadership teams. Companies tend to allocate their salary budgets to hiring and rewarding these executives.
"With the pandemic, many employers have taken actions to review their workforce and pay effectiveness. The difference in pay gap suggests that companies are prioritising their salary budget for hiring and rewarding high-performing talent including those at the executive level."
Just 13% of firms may freeze pay increases this year, down from 30% in 2020
The number of companies expecting to freeze salaries could decrease sharply this year, signaling employers' optimism towards the year ahead. Last year, close to one-third of private sector companies in the region implemented a freeze in pay increases, in efforts to cut costs.
This is expected to fall to 13% of companies this year, with 87% of companies expecting to conduct a salary review (70% in 2020).
Pharmaceutical and health services, high tech the most optimistic industries in 2021
According to the report, the most optimistic industries this year are both the pharmaceutical and health services, and high tech industries, which are forecast to have a salary increase of 5% or more.
At the same time, these industries will continue to see an increase in demand for talent as employers prepare for growth and development opportunities in 2021.
Lead image and infographics / Willis Towers Watson