ASIA PACIFIC, 18 January — As countries in Asia Pacific continue to navigate the COVID-19 pandemic, employers in the region are projecting pay rises at an average of 5.3% this year, according to Willis Towers Watson (WTW)’s latest Salary Budget Planning Survey report.
Last year, companies were forced to revise down their pay rise budgets, leading to an average increase of 5.4% in 2020 (compared to 5.6% of actual salary increase in 2019). This year, companies in 13 out of the 20 markets have decreased their 2021 average salary increase forecasts.
Source: Willis Towers Watson 2020 Q1, Q4 Salary Budget Planning Survey Report - Asia Pacific
Companies are looking ahead to 2021 with cautious optimism to restore stability post-pandemic, especially in countries such as Australia, China, New Zealand, Taiwan and Thailand. On the other hand, salary increase forecast in India has dropped the most by 1.1% to 7.9% this year (vs 9% in 2020).
Edward Hsu, Business Leader, Rewards Data & Software in Asia Pacific at WTW said: “After a difficult year for employers and employees – battling lockdowns, employee safety issues, working from home and declining revenues – many employers are finding ways to handle the crisis better, manage their businesses and help their employees with a more focused work and reward strategy.”
The number of companies expecting to freeze pay is expected to decrease sharply this year, in a further sign of cautious optimism for 2021. Last year saw nearly a-third (30%) of private sector companies in Asia Pacific freeze pay increases as they were curtailing costs. This is expected to fall to 13% of companies this year with 87% of companies expecting to conduct a salary review (vs 70% in 2020).
Different industries have experienced differing fortunes during the pandemic, and that is reflected in anticipated pay rises for 2021, with some businesses somewhat less affected under the pandemic. The most optimistic industries are Pharmaceutical and Health Services, and High Tech which are forecast to have a salary increase of 5% or more this year. These industries will continue to see an increase in demand for talent as employers in these sectors prepare for growth and development opportunities in 2021.
“At the peak of the COVID-19 crisis last year, many organisations took the opportunity to rethink their business development strategies. Digitalisation has played a key role in accelerating organisation transformation in many markets. This shift has had an impact on talent demand trends. In markets such as China, India, Indonesia, South Korea and Japan, roles in Sales, Data Science and Risk Management have had the highest compensation increase. These functions saw a higher demand for talent and movement in pay,” said Edward.
COVID-19 had a wide range of impact not just to industries but also in how salary budgets are prioritised to different levels of employees in an organisation across different markets. The latest Salary Budget data also shows that the pay gap between executives and production labour is significantly larger in the emerging markets. The ratio of executives’ pay in China, India, Indonesia, Malaysia, Philippines and Thailand is at least 25 times greater than the average workers. Compared to markets such as Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan, the pay gap between executives and workers is less than 15 times for the actual total compensation.
Source: 2020 Willis Towers Watson Compensation Survey - General industry (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand)
“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,” added Edward.
While there is certainly more optimism for 2021 in both employers and employees alike, the recovery for many hard-impacted businesses would not be smooth sailing. Companies will continue to experience smaller salary budgets this year. Therefore, it is important for companies to differentiate their allocation of pay rises, so that they can provide meaningful salary increases for their best and most valuable talent, and prioritise spending on jobs that are likely to contribute the most to the success or survival of their businesses.
The Salary Budget Planning Report is compiled by Willis Towers Watson’s Data Services Practice. The survey was conducted online in October/November 2020, receiving over 18,000 sets of responses covering over 130 countries worldwide.
The report summarises the findings of Willis Towers Watson’s annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2020 and beyond.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance.
