Salary increases in Asia Pacific saw a mild rebound this year for the first time since 2014, said advisory, broking, and solutions firm Willis Towers Watson (WTW).
Averaging at 5.7% across 17 markets, salary increases are 0.1% higher than the 2017 average of 5.6%, according to the firm’s latest Salary Budget Planning Survey Report (Q3).
This gentle upward trend is expected to continue through 2019 due to the region’s realistic outlook for business results this year, said the company, adding that 60% of surveyed organizations expect their company performance in 2018 to be in line with the prior year’s results.
For each dollar to an average worker, $1.44 goes to a top performer
On average, 16.8% of the salary increase budget is being allocated to top performers, which represent 12.8% of employees across the region, said WTW.
“This implies that for each US$1 allocated to an average or below-average performer, US$1.44 is allocated to a top performer,” said Shai Ganu, Managing Director of Talent & Rewards in South Asia and Rewards Business Leader for Asia Pacific.
The annual incentive for 2018 averaged at 1.5 months’ base salary, which amounts to 12% to 13% across the region, according to WTW.
Incentives were slightly higher in China, Hong Kong, Malaysia, Singapore, Thailand and Vietnam at 1.7 months on average, while these averaged at 1.8 months for Taiwan, the firm observed.
According to WTW, salary increases are expected to be 0.1% to 0.5% higher compared to 2018, particularly in nine out of 17 markets including China, Indonesia, Japan, Malaysia, South Korea and Thailand.
Salary movements will remain stable in Australia, Hong Kong, India, New Zealand, Philippines, Singapore, Taiwan and Vietnam, the firm noted.
Fewer firms plan to add new headcount
Despite the stable business outlook, recruitment efforts could slow down over the next 12 to 24 months, as only 27% of Asia Pacific organizations plan to add new headcount, compared with 39% in the previous year.
Nonetheless, organizations planning to maintain their current headcount increased from 54% to 66%.
As with the previous year, only 7% will reduce their headcount.
Signs of automation, outsourcing, and upskilling
These trends suggest that more organizations are beginning to optimize work through automation, outsourcing, and upskilling, WTW pointed out.
Additionally, voluntary attrition has gone down to 13.2% from a high of 15% on average, reflecting improvements in how employers are redistributing and developing their existing talent pools, the firm added.
Pharmaceutical and health sciences remain ahead; financial services lags behind
The strong growth of Pharmaceutical and Health Sciences industry in the region is helping to keep the sector’s salary increases ahead in most markets, according to WTW.
The sector is bolstered by biotech developments and other digital innovations, as well as recent policy reforms in China and Japan, the firm said.
On average, 2018 median salary increases in the Pharmaceutical and Health Sciences industry is 0.2% higher compared to the general industry, with the larger differences seen in Indonesia (0.9%), China (0.5%) and India (0.3%), the firm added.
On the other end, salary increases in the Financial Services industry still lag behind in most of the markets in the region, WTW noted.
The sector has been facing headwinds in a continuously evolving business landscape, particularly due to intensifying competition from Fintech developments, thereby making firms in this sector to be even more cautious with their overall spending, the firm said.
On average, the 2018 median salary increase in Financial Services is 0.3% lower than the general industry, WTW added.