SINGAPORE, August 30, 2021 — Pay rises are making a comeback. Companies in Asia Pacific (APAC) plan to give employees larger rises next year as they recover from the economic fallout of the pandemic and face mounting challenges attracting and retaining employees, according to the latest Salary Budget Planning Report by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.
As a fast-growing region, markets in APAC will see the highest 2022 salary increases, while countries in North America and Western Europe are expected to stay flat, and the rest of the regions taking longer to recover and stabilise. Companies in APAC are projecting average salary increases of 5.3% for executives, management and professional employees, and support staff next year. This is up from the average 4.9% increases employees were granted this year. Emerging markets such as India at 8.8% and Indonesia at 6.5% are forecasting significant salary budget increases for 2022 compared with this year.
Source: Willis Towers Watson 2021 Salary Budget Planning Survey Report (July edition)
Average salary increase excluding zeros
With APAC expected to perform better than the rest of the world in trade, the overall manufacturing output across the region has also shown substantial recovery. In addition, the pandemic has produced accelerated growth and enormous demand for wireless communication. Strong foreign direct investment into the region along with the demand for technology, communication and 5G equipment, have created new demand and job opportunities across the High Tech and Media industries. High Tech companies in the region are projecting the largest increases (5.5%) followed by Manufacturing (5.4%), Pharmaceutical and Health Sciences (5.2%) and Media companies (5.2%).
Source: Willis Towers Watson 2021 Salary Budget Planning Survey Report (July edition)
Average of overall median salary increase of available APAC countries, excluding zeros
“Many businesses awarding high salary increases are also acknowledging and rewarding their employees who have demonstrated resilience throughout the pandemic. Although there is a positive outlook among businesses, companies are also monitoring the inflation trend as it looks set to increase in several markets in APAC. Organisations may further adjust their 2022 salary budget forecast in the later part of this year,” said Edward Hsu, Business Leader, Rewards Data and Software, Asia Pacific, Willis Towers Watson.
Higher salary rises in 2021 are partially attributed to few companies freezing pay increases compared to last year. In 2020, an unprecedented number of companies cancelled salary reviews (30%) in APAC, whereas in 2021, the figure dropped to 13% and is forecast to return to the low level of 2.5% next year. Notably, rises are returning to close to pre-pandemic levels. The larger rises coincide with a surge in demand for labour and a shortage in supply of specific professional roles with premium skills.
Companies are also going through extensive planning in 2021 and will be experimenting with hybrid models that better fit employees’ lifestyles, which may also result in long-term business savings. The buoyant job market and the challenge of engaging employees outside of an office environment mean that companies will need to pay top dollar to hold on to their top talent.
With the recovering environment in many markets, attrition rates have also moved up in those with positive business outlooks, including Australia, China, Singapore, Taiwan and Vietnam.
“Attracting and retaining employees remains a major challenge for employers. In fact, the current environment makes these challenges even more difficult. Employers need to deliver a sound employee value proposition supported by comprehensive Total Rewards programmes. Beyond competitive salaries, which are table stakes at the moment, companies also need to focus their spend on a diverse set of benefits, wellbeing and upskilling programmes to drive employee engagement,” added Edward.
Close to 50% of companies in Singapore expect their business performance to be ahead of target this year and 47.3% to be in line with their business outlook for 2021. Employers in Singapore are expecting an average salary budget increase of 3.2% for 2021 and 3.7% for 2022.
Companies in Fintech, Media, and Pharmaceutical and Health Sciences reported the highest average salary budget increments at 4.2%, 4.0% and 4.4% respectively for next year. Industries such as Energy and Natural Resources indicated the lowest average salary budget increase at 3.1% for 2022.
Organisations are also likely to create more jobs in functions such as sales, information technology and engineering. The survey shows that 27% of companies plan to increase headcount in the next 12 months. Compared to last year, this is a positive outlook as only 12% of companies were planning to add headcount in their recruitment plans for 2021. Increments are expected across the board in organisations, particularly at junior and mid-levels, partially driven by the turnover rates at these levels.
“Companies are between a rock and a hard place when it comes to compensation planning. On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. On the other hand, companies recognise they need to boost compensation, especially in sectors where there may be a manpower crunch. This situation has driven organisations to explore alternative options to fixed pay increases, including sign-on, referral and retention bonuses, functional and skill premiums, mid-year adjustments or pay increases,” said Vidisha Mehta, Head of Talent and Rewards, Singapore, Willis Towers Watson.
The 2021 Salary Budget Planning Survey – July 2021 was conducted by Willis Towers Watson Data Services between April and June 2021. A total of 1,405 companies representing a cross section of industries from 13 markets in Asia Pacific participated in the survey. The report provides data on actual salary budget increase percentages for the past and current years, along with projected increases for next year.
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. Together, we unlock potential.
