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Salary increases in Asia Pacific remain stable at 5.6% with companies maintaining conservative outlook in 2020, Willis Towers Watson survey finds

Employees in Fintech, High Tech, Pharmaceutical and Health Sciences industries will see the highest salary increases next year

Talent|Total Rewards
Beyond Data

October 16, 2019

Despite continuous pressure on businesses in the region to keep costs down amid slowing economic growth, salary increases in Asia Pacific remain stable at an average of 5.6% this year.

Asia Pacific, 16 October 2019 — Despite continuous pressure on businesses in the region to keep costs down amid slowing economic growth, salary increases in Asia Pacific remain stable at an average of 5.6% this year, according to the latest Salary Budget Planning Survey Report (Q3) by Willis Towers Watson (NASDAQ: WLTW), the leading global advisory, broking and solutions company. This is slightly lower than the projected increase of 5.9% last year.

Figure 1: Asia Pacific salary increase trends over the past five years (2014-2020)
Figure 1: Asia Pacific salary increase trends over the past five years (2014-2020)

Source: Willis Towers Watson Salary Planning Survey Report 2014-2019 Q3 – Asia Pacific Average of 17 markets. Includes salary freeze (0% adjustment).

Sixty-six percent of the surveyed organisations expect their company performance in 2019 to be in line with last year while only 25% of companies see better business results this year, a drop of 10% from 2018. Companies are experiencing more risks in their business environment as the unstable political and economic outlook declined, as well as the slowdown in global demand resulting in weaker export performance in Asia Pacific.

Organisations in most markets remain conservative in setting their salary increase budgets for 2020. Only nine out of 20 markets surveyed plan to have a higher salary budget next year with an increase of at least 0.1% in 2020. These include Bangladesh, Cambodia, China, India, Japan, Pakistan, Sri Lanka, Thailand and Vietnam.

Early projections indicate that salary movements will remain unchanged for the rest of the markets, including Australia, Hong Kong, Indonesia, Macau, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea and Taiwan.

Figure 1: Asia Pacific salary increase trends over the past five years (2014-2020)
Figure 2: Salary increase by market – Asia Pacific

Source: Willis Towers Watson Salary Budget Planning Survey Q3 Report – Asia Pacific. Includes merit and promotional increase, and salary freeze (o% adjustment), median.

With the cautious business outlook, recruitment efforts are expected to slow down over the next 12 to 24 months. The Survey shows that only 22% of Asia Pacific organisations plan to add new headcount compared to 27% last year. Organisations planning to maintain their current headcount increased from 66% in 2018 to 72% in 2019. As with the previous year, only 7% of organisations plan to reduce their headcount.

“We are seeing a change in employment trends which indicates that more organisations are beginning to optimise work through upskilling, automation and outsourcing. Over the years, our report also found a drop in voluntary attrition rates across the region, from 14.3% in 2017 to 10.4% last year, likely due to the global economic uncertainty. On the contrary, we are seeing an increase in involuntary attrition, rising from 3.6% in 2017 to 4.0% in 2018, said Edward Hsu, Business Leader, Data Services and Compensation Software, Asia Pacific, Willis Towers Watson.

“Companies in the Manufacturing, Energy and Natural Resources, and Pharmaceuticals and Health Sciences industries have the highest involuntary attrition rate in the region. The expansion of workplace automation in these industries has changed the mix of talent pools being used as employers tend to add more non-employee talent to their workforces, reducing their reliance on full-time employees. Nevertheless, companies need to ensure the optimal combination of humans and automation as they reinvent their jobs”

Fintech, High Tech, Pharmaceutical and Health Sciences stay ahead while Banking continues to lag behind

The Survey also found that employers in the Fintech industry in China, Hong Kong and Singapore are planning to increase their salary budget by up to 2.1% next year on average, the highest jump among all industries (6.2% in 2020 versus 4.1% in 2019). The High Tech industry in Asia Pacific is also projecting one of the highest salary increases next year (5.8% in 2020 versus 5.7% in 2019).

In addition, the Pharmaceutical and Health Sciences industry continues to show strong growth with 42% of the companies expecting a better outlook in business performance next year. The industry is bolstered by the increasing health conscious consumers in Asia Pacific and expansion of the healthcare and medical consumable markets as a result of the increasing healthcare demand from the ageing population in many of the countries. This is helping to keep the sector’s salary increases ahead in most markets. Employers in this industry are projecting a salary budget increase of 5.9% for next year, a 0.2% increase from 2019.

Salary increase budgets in the Banking industry are the lowest and expected to remain stable at 4.7% next year. The sector has been facing headwinds due to the volatile economic environment, decline in business outlook and the continuously evolving business landscape, especially the intensifying competition from Fintech developments. Financial institutions are now even more cautious with their overall spending. Despite these, the Banking industry still draws the highest variable pay among all industries in the region. Employers in the banks are projected to pay a variable incentive of about three months (24.9%) of base salary to employees in 2020.

On the other hand, salaries in the Insurance industry will see an increase from 5.1% this year to 5.3% in 2020. Variable pay in the Insurance industry is also among the highest at more than two months (17.7%) of base salary. The industry is also expected to add more headcount next year, a trend that is similar with the High Tech and Pharmaceutical and Health Sciences industries.

While most companies are keeping their salary budgets steady, it is also found that close to two-thirds of the organisations surveyed expect their headcount growth rate in 2020 to be in line with this year’s expansion. One-fourth of the organisations (25%) expect their headcount growth to stay ahead next year.

“Jobs in sales, engineering and technical skilled trades are the top three functions that organisations are likely to recruit in the next 12 months. In particular, engineering jobs are in demand and this could be driven by the increase digitalisation and on-going transformation of business across industries. However, attracting and retaining key digital talent is among the top challenges for organisations around the world. Employers will need to take a different and innovative approach with their compensation and rewards strategy for digital roles and skills,” added Edward.

About the survey

The Salary Budget Planning Survey is a biannual survey on salary movements around the world compiled by Willis Towers Watson Data Services. The survey looks at a range of industry sectors and job grades, focusing on salary movement and review practices to assist companies with their compensation planning, This Q3 survey was conducted in July 2019 with 4,521 sets of responses received from 1,128 companies across 20 markets in Asia Pacific.

About Willis Towers Watson

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. Learn more at willistowerswatson.com.

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