Meanwhile, employees in Malaysia, Singapore, and Hong Kong may look forward to real salary increases (factoring in inflation) of 2.8%, 2%, and 1.1% respectively.
The overall outlook on pay increases across Asian economies seems fairly positive for 2022, when compared to the rest of the world. Real salary increase rates (i.e. factoring in inflation) across the APAC region are forecast to be 1.9% in 2022, significantly higher than the global average of 0.9%.
“Although some regions, such as the Americas, Africa and the Middle East, have a higher nominal increase forecasted, the APAC region is predicted to have much lower levels of inflation in 2022. This means that once inflation is taken into account, workers in APAC will see a much higher real salary increase than anywhere else in the world,” Lee Quane, Regional Director – Asia at ECA International (ECA), explained at the launch of the latest Salary Trends Report by ECA.
Much of this outlook is expected to be driven by Southeast Asian nations, while dependent on how inflation pans out, with Vietnam ranked first in both APAC and globally for 2022 forecast real salary increase (%) for 4.2%, against the 2021 actual of 3.5%.
Vietnam just managed to outpace China, where the forecasted salary increases are at 4%, similar to the 2021 actual of 3.9%, making it the second largest real salary increase in Asia in 2022, and third globally.
This comes after salary growth rates in Vietnam fell to multi-year lows in 2020, with signs of recovery seen in 2021.
Quane added: "This pace of recovery is relatively slow compared with other locations in the region and is likely due to the fact that many employers in the country have been impacted by the Delta variant of the COVID-19 virus which arrived in Vietnam in early 2021."
"Nonetheless, we believe that it may take a few years before salary growth rates in Vietnam return to pre-pandemic growth rates of 8% or more.”
Quane, further, cautioned there are several threats to China's forecast salary increases, which include the extent to which China’s zero-COVID policy may impact economic growth as well as the potential for inflation rates to surpass forecasted levels in 2022.
As for third-ranked India, growth rates are set to quicken next year but this will still remain below the pre-pandemic era. Quane revealed: "Salaries are forecast to grow at the fastest rate in Bengaluru in 2022, where salary growth will outpace that offered to employees in either Delhi or Mumbai.”
To note, all figures listed in this article, and in the table above, are forecast real salary increases, calculated by looking at the predicted average nominal salary percentage increase (i.e. the salary increase given to employees by their employers) and subtracting the forecast inflation. If, for instance, the average nominal salary increase in a country is 4% and inflation is at 2.1%, this would result in an average real salary increase of 1.9% (4%-2.1%=1.9%).
For the list of 10 economies where the highest rate of salary growth may be seen in 2022, please refer to the table above.
Let's take a closer look at some of the trends witnessed in and around the region.
Workers in Singapore may see a real salary increase of 2% on average in 2022 – up from the actual of 1.2% in 2021.
Quane noted that just 6% of companies based in Singapore will implement a pay freeze in 2022, significantly down from the 22% that put in a pay freeze this year. "This all points to a much-improved outlook for workers in Singapore as the economy gradually recovers from COVID-related restrictions and uncertainty,” he added.
Workers in Hong Kong may see a real salary increase of 1.1% in 2022 – almost double the real salary increase of 0.6% that was seen this year. Further, a much lower percentage of companies are expecting to enact salary freezes next year – down to 11% compared with 18% this year.”
Quane shared: “However, when compared to salary trends in other Asian nations, Hong Kong still lags behind many of its neighbours," comparing it to workers in Taiwan who are predicted to see real increases of 2%.
ALSO READ: 2021 salary and trends report for Hong Kong
SEA frontrunners: Thailand, Malaysia, Indonesia
Southeast Asian neighbours Indonesia, Vietnam, Thailand, and Malaysia feature in the top six Asian nations for anticipated real salary increases in 2022.
"Indonesia and Malaysia were among the countries most impacted by the pandemic and are expected to see some of the biggest jumps in rates of salary growth in Asia Pacific in 2022 compared to 2021, as their respective economies start to return to normality after the pandemic. If these countries are able to keep inflation under control in 2022, the improved economic outlook will mean that real salary increase rates for workers in these countries will be some of the highest in the region," Quane observed.
Taiwan saw a slight jump in the forecast real average salary increase – an anticipated increase of 2% in 2022 compared to 1.6% this year.
In Quane's view, Taiwan managed to escape many of the worst economic effects caused by the COVID-19 pandemic due to its early success in mitigating the spread of the virus.
"Therefore, although the year-on-year rise in the rate of salary growth of 0.3% is fairly small, this is due to the fact that companies in Taiwan managed to keep a fairly stable level of salary increases over the past few years. Indeed, Taiwanese salaries have rebounded more broadly than some of its neighbours with only 9% of workers seeing a salary freeze this year compared to 22% in Singapore and 18% in Hong Kong."
Rest of the world
Outside of Asia, the report stated that the average salary increase globally is predicted to be at 4.6%. However, factoring in the higher levels of inflation elsewhere in the world, the real salary increase worldwide will be just at 0.9%.
According to its analysts, Argentina is at the bottom of the rankings with a forecast real salary decrease of 10% in 2022, despite the fact that inflation is predicted to halve to 25% from 51.4% this year.
"Despite many Asian nations expecting to see improved consumer buying power with real salaries increases both this year and next, the same unfortunately cannot be said for every country as supply chain issues and rising gas prices have fuelled inflation while the effects of the pandemic continue to take their toll on salary increases for many," Quane said.
"This trend looks set to continue for workers in many locations who will see decreases to their salaries in real terms next year, as inflation outstrips any nominal increase. This is even the case for a major economy such as the United States where workers will see a 0.5% decrease in real terms."
About the study: The survey reports current-year salary increases for local national employees and the anticipated increases for reviews in the forthcoming year. It is based on information collected from over 370 multinational companies for over 70 countries and cities between August to September 2021. The survey included data from all seniorities across a range of industry groups.
Image / Provided