Salaries in Asia Pacific to Grow at a Slightly Faster Pace in 2013 as Business Outlook ImprovesStocks and Financial Services Press Releases Friday November 30, 2012
- Salary increase rates for 2013 are expected to range from 2.3% to 12.0%, slightly higher than 2012
- Two-thirds of companies have a more favourable business outlook, compared to six months ago
- Over 90% of companies plan to increase headcount in the next 12 months, with sales and marketing functions expected to see the greatest increases
With better macroeconomic outlook and improved business sentiments, companies across the Asia Pacific region expect salary budgets in 2013 to grow slightly faster than 2012, according to the latest 2012 3rd Quarter (Q3) Asia Pacific Salary Budget Planning Survey by global professional services firm Towers Watson (NYSE, NASDAQ: TW). Over 90% of the survey respondents also plan to hire new employees in the next 12 months, a strong testament to the positive hiring outlook in the region.
The survey shows that salary growth rates in the Asia Pacific region are expected to range from 2.3% to 12.0% in 2013, representing a slight increase of 0.1 to 0.5 percentage point from 2012. For all 13 markets covered in the survey, salary growth rates are expected to outpace projected inflation rates for the respective markets for 2013.
Rachelle C. Arcebal, Global Data Services Practice Leader, Asia Pacific, Towers Watson comments, “With a better macroeconomic outlook, business confidence has improved significantly over the last few months, and nearly two-thirds of the companies in the region are now more positive about their business performance. Over 90% of them also intend to hire in the next 12 months. However, our survey shows that the companies in the region are only projecting a slightly faster salary increase for 2013. This indicates that employers are generally still in a cautious mood. Nonetheless, we see many of them doing their best to offer competitive and comprehensive compensation packages in their recruitment efforts, taking into consideration inflationary pressures that are weighing on their employees.”
Respondents from both Vietnam and India are budgeting a double-digit salary increase of 12.0% in 2013, the highest within the region. These two countries are also most affected by inflation, with India being expected to post the region’s highest inflation rate of 7.6% in 2013, followed by Vietnam with 6.9%. Salary in India is expected to increase at the fastest pace within the region in 2013, with a rate of increase that is 0.5 percentage point higher than in 2012.
In Singapore, the respondents are budgeting an average salary increase of 4.5% for 2013, higher than 4.3% for 2012. As unemployment rate continues to remain flat at the low 2.0%, the job market in Singapore is expected to remain tight, which will continue to lend strong support to domestic wage growth moving forward.
Arcebal comments, “Given the unique nature of Singapore’s economy and its capacity constraints, Singapore has always been faced with a tight labour market, especially in certain sectors which require specific skill sets and expertise. The recent tightening of regulations on companies’ ability to hire foreign workers and rising employee medical costs may accelerate wage inflation. It is imperative that companies here look for new ways to improve workforce planning, invest in technology to enhance productivity, and put a greater focus on better managing and communicating employee benefits and rewards.”
The survey shows that the business outlook in the region has improved significantly over the past six months. Almost two-thirds (65%) of the respondents have a favourable outlook for their business and expect their business performance to improve by end of 2012. This represents a significant increase from just 10% in the previous survey conducted half a year ago. The proportion of companies with a negative outlook has also shrunk from 28% in the previous survey to just 10%. 25% of companies have a neutral outlook and expect flat growth.
In terms of staff turnover rates, China, India, Japan, Singapore and Thailand are expected to register slightly higher voluntary staff turnover in 2013, while Indonesia, Malaysia, Taiwan and Vietnam are projected to have lower voluntary staff turnover in 2013.
Arcebal comments, “It is unsurprising that career development is a priority for employees in the Asia Pacific region, especially in the emerging economies where growth prospects are brighter. As the middle class population expands, many young workers are demonstrating a strong desire to build a successful career in line with their aspirations to achieve a better quality of life. Employers should also recognise that while pay is still an important element in the equation, the key is to be able to design a comprehensive employment value proposition that balances different drivers and motivators.”
The Asia Pacific Salary Budget Planning Survey by Towers Watson is conducted on a half-yearly basis. The latest Q3 survey was carried out between August and September 2012. It was conducted online among companies from 13 markets/ countries across Asia Pacific. Altogether, over 500 sets of responses were received from companies from a wide range of industries, including financial services, pharmaceuticals, automotives, chemicals, fast moving consumer goods, high tech, energy, and retail.
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the Web at towerswatson.com.
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