Asian Workers to Get Biggest Pay Hike
Philippines forecasts as the Fifth Asian Country to receive largest Salary Increase
by: Jerry Liao
The year of the Rat is fast approaching and almost all fortune tellers are saying that the new year will be a great year for us. Great year they say? Does that mean we will be more prosperous? It seems we are heading toward that direction because the surveys agrees with what the fortune tellers are saying.
Asian workers are to continue receiving the highest salary increases worldwide, according to ECA International’s Salary Trends Survey 2007/2008, with average figures for the region forecast to be 7.3% – well above the global average of 5.9%.
ECA’s Salary Trends Survey 2007/2008 contains information collected from multinational companies about actual salary increases for 2007 and predicted salary increases for 2008. Including data analysis in the context of economic conditions, the survey is used by international companies to monitor and benchmark company salary levels in local markets around the world.
In Hong Kong, despite a strong economy and tight labour force, salary increases are expected to remain at 4% – the same as in the previous two years. This is the second lowest rate in the region and 3.3 percentage points below the regional average.
“It is not unusual for developed economies such as Hong Kong to have lower salary increases than in developing locations, where rates of economic growth are higher,” said Lee Quane, General Manager of ECA International in Hong Kong.
China’s salary increases are anticipated to remain static at 8%. Singapore’s workers can expect salary increases of 5%. While this increase is below the regional average, this is up on last year’s 4.5% increase – reflecting a longstanding trend of rising salary increases in the country.
“While workers in China and Singapore receive lower salaries than their Hong Kong counterparts, the fact that they will be enjoying significantly higher salary increases means that the salary gap between these locations will continue to narrow,” said Quane.
Regionally, India and Vietnam are expected to see the biggest increases when compared to last year’s salary rises. In India the 14% salary rise is significantly up on last year’s highs of 12.6%, while Vietnam’s 10% prediction shows a notable increase on the 8.5% salary increments given in 2007.
The Philippines is forecast to join India, Indonesia, Vietnam and China in 2008 as the fifth Asian country in the top ten seeing the largest salary increases in the survey. Salary increases in the region are predicted to be 25% higher than they were in 2005 and for the first time the region’s salary increases are expected to overtake those of Eastern Europe where wage rises are showing signs of starting to stabilise.
Japan is expected to experience the region’s lowest salary increases again this year. They are forecast to remain at 3% – the same as in 2007.
Within the region, real wage increases – the difference between actual salary increases and inflation – have shown a rising trend in recent years.
However, unexpectedly fast inflation growth over the past three months prompted by significant rises in oil, food and accommodation costs, will counter-balance many of these high salary increases considerably. Most locations in Asia will therefore see lower rates of real wage increases than in 2007.
“This latest upswing in inflation, which has caught many people by surprise, will have an impact on real salary increases in 2008. When many companies calculated salary increases for 2008, inflation forecasts were relatively low,” explained Quane.
“Inflation in Singapore, for example, is now around two and a half times higher than anticipated in October forecasts, so employees here are likely to experience relatively subdued real income rises in comparison to previous years. The same goes for major economies such as China, Korea and Taiwan,” he said.
The combination of lower real wage increases, together with a relatively tight labour market in many Asian economies, will become a headache for companies seeking to attract and retain talented staff in 2008.
“Companies will need to consider revising their forecast salary increases during 2008 or provide higher salary increases next year to make up for this year’s relatively low increase in real incomes,” said Quane.
Before any of us jump for joy because of this survey, let me just remind you that these are just numbers and surveys. Making it a reality is still a challenge. The important thing right now is for us to continuously develop our skills, working attitude and personality. So that when the survey happens, we will be one of the beneficiaries. Hardwork is still key and most of all – PRAYERS.