Press Release

Low labour costs in Thailand and emerging ASEAN erode China’s competitiveness

June 3, 2016
| Thailand

Bangkok, June 3, 2016 —Base salaries among Thailand and emerging economies in the Association of South East Asian Nations (ASEAN) are substantially lower than those in mainland China, which is losing its labour-cost competitiveness to them, according to new research by leading global advisory, broking and solutions company Willis Towers Watson (NASDAQ: WLTW).

China’s base salaries across all job grades are between 47% - 65% higher than in Thailand. They are between 5% and 44% higher than in Indonesia, which is the most expensive labour market among the emerging ASEAN economies (including Thailand, Philippines, Vietnam, Malaysia and Indonesia) covered in the research. The report also covers Singapore, but this market is regarded as a developed economy.

The findings in the Asia Pacific section of Willis Towers Watson’s 2015/2016 Global 50 Remuneration Planning Report enable cross-country pay competitiveness comparisons across the region, by providing base salary information using a consistent framework for job levels. The report also sheds light on the impact of currency movements on base salaries in U.S. dollar terms.

Among the emerging ASEAN countries, Thailand and Malaysia are the lowest payers at the top management and senior management levels, respectively. For top management, China pays 1.6 times that of Thailand, while for senior management it pays approximately 1.9 times that of Malaysia.

Furthermore, the report revealed that entry-level white-collar professionals in China receive, on average, an annual base salary of approximately US$20,680, around 47% more than their peers in Thailand, who receive approximately US$14,087. The largest differential is at the top management level, with China paying 65% more than Thailand, a gap that narrows to 54% and 50% at the senior management and middle management level, respectively.

In addition, among ASEAN’s emerging economies, Thailand offers average pay rates across the professional, middle and senior management levels, except at the top management level for which the country has the lowest salaries.

“This report clearly shows that low labour cost is no longer a strong selling point for China, while it continues to encourage foreign investment. Nowadays, all ASEAN countries are cheaper than China in terms of salaries and overall labour costs, making these countries more attractive to foreign investors,” explained Ms Pichpajee Saichuae, Managing Director of Willis Towers Watson Thailand.

“Moreover, this research tells us that among ASEAN countries, Thailand provides a significant advantage in terms of human resources costs, when compared to its Asian peers, giving it a competitive edge. This is an important element that might push a number of international companies to reconsider where to locate their operations in Asia,” she added.

At the professional and middle management levels, average base salaries in Vietnam and the Philippines are the lowest in ASEAN and therefore lag far behind those of China.

“China is focusing more on R&D and more higher-end value-added production, which requires a higher skill-set. For that reason, along with proximity to other parts of the supply chain, although China is much more expensive, its more mature infrastructure and skilled workforce will likely continue to attract companies particularly when compared with ASEAN’s emerging economies, said Mr. Sambhav Rakyan, Data Services Practice Leader, Asia Pacific at Willis Towers Watson.

Singapore base salaries remain far higher than in Greater China

Although Indonesia stands out among ASEAN’s emerging economies for having the highest base salaries, it lags far behind the most developed economy in the region, Singapore. The pay gaps are even significantly wider when comparing Thailand with Singapore. Base salaries across all job levels in Singapore are approximately 97%-228% higher than those of Thailand.

Across the job grades from professional level to top management, base salaries in Singapore are approximately 3%-10% higher than those of Hong Kong, which is the highest paying economy in Greater China.

Singapore pays 28%-52% more than China at the middle management to senior and top management levels. The largest gap is at the professional level where Singapore pays more than twice that of China.

“Singapore has always been a leading economy in the region. As it continues to enhance its competitiveness in the international arena, it wants to bring in top talent with knowledge of best practices from all over the world, so offering globally competitive salaries is an important part of that process,” said Mr. Rakyan. “In terms of Greater China, Hong Kong has long been a hub for international talent; its gap with Singapore narrows once Hong Kong’s more favourable tax rates are taken into account.”

Mr. Rakyan added that base salaries in China are likely to stay high to attract talent given that China is putting greater emphasis on quality and sustainability in its products and services. Furthermore, the integration of its financial markets with the rest of the world means that salaries in that sector will need to be globally competitive to attract and retain the best talent.

About the survey

The Willis Towers Watson 2015/2016 Global 50 Remuneration Planning Report. This report is a comprehensive global compensation and benefits planning tool for companies operating in disparate markets and multicultural legislative environments. The report is designed to help companies establish a consistent global compensation strategy and ensure compliance with local laws and practices. Information is presented as a snapshot of statutory benefits and market practice. A salary structure which presents salary and benefits by different job levels, based on Willis Towers Watson's proprietary Global Grading System (GGS). The latest Global 50 Remuneration Planning Report is available for purchase.

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 39,000 employees in more than 120 countries. 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

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