With the rise of inflation and tight labor markets, employers in the APAC region are upping their salary increase projections for this year.
By Zee Johnson
The Salary Budget Planning Report by Willis Towers Watson, a biannual report that looks at salary movements around the world, recently found that two in five APAC respondents (42%) are planning for higher salary budgets this year. Twenty-five per cent said they have already increased their expected salary budgets for 2022 from their original July 2021 projections.
Organisations are now budgeting an overall average increase of 5.08% for executives, management and professional employees, and support staff this year. In 2021, the average pay increase was 4.62%.
Some of the projected changes by country include China, 5.6% to 6.0%; Hong Kong, 3.3% to 3.8%; India, 8.7% to 9.2%; Indonesia, 5.8% to 6.6%; Japan, 2.3% to 2.6%; and Malaysia, 4.1% to 4.7%. Some industries that made notable increases include the general industry, 4.62 to 5.08%; consumer products and retail, 4.93% to 5.05%; financial services, 4.09% to 4.85%; high tech, 4.76% to 5.39%; and insurance, 4.02% to 4.96%.
According to the survey, 30% of employers said the rigid labor market was the cause or their budget increases from prior projections, whilst 23% anticipated stronger financial results.
Wilson Tower Watson’s Edward Hsu, business leader of rewards data and software for Asia Pacific, says employers are considering a number of things when it comes to salary increases, most particularly, the heightened cost of living. “There seems little doubt that costs, wages and prices are going up this year,” he said in the report. “Our study shows that employers are influenced by different factors in adjusting their salary budget projections this year. However, with APAC’s consumer price index (CPI) expected to hit 3 percent or even more in some markets, employers will most likely take living costs into account for salary increases.”
Along with a steep cost of living comes a talent shortage that in some sectors is expanding the demand for skilled workers. This raging war on talent is causing stiff competition for companies looking to attract and/or retain employees who now have more options.
“The labor market anticipates new joiners not only from the unemployed but also from the currently employed talent pool, prompting employers to closely look into their retention strategies,” Hsu said. “Whether an organization is experiencing the Great Resignation or the Great Hire phenomena, having relevant and competitive pay and benefit packages remains critical to attracting and retaining talent. There is a great reprioritisation of work, rewards and careers under way, and it’s putting significant pressure on compensation programmes for many employers.”