Asian nations lead the way again for real salary increases, with 13 out of the top 20 increases being seen in Asian nations, and all of the top five, ECA International said recently when releasing the results of annual salary survey.
Once again, the vast majority of the highest real salary increases in the world are predicted to be seen in Asia, said Lee Quane, Regional Director – Asia at ECA International.
The average real salary increase in Asia Pacific is forecast to be 3.2%, significantly higher than the global average of 1.4% and nearly three times the European average of 1.1%, according to the results
This is a trend that we have seen for many years now due to low inflation and rising productivity in many Asian economies, resulting in salaries growing rapidly compared to other regions, Quane noted.
The average real salary increase for workers in China is forecast to be 3.6% above inflation in 2020, a slight decrease from 3.7% in 2019, said ECA.
However, the increase is still one of the highest in the world, the firm pointed out.
Despite a nominal salary increase of 6.0%, after factoring the forecast inflation of 2.4%, workers in China will see an overall real salary increase of 3.6% - joint 8th highest globally, according to ECA.
Although there are signs that the Chinese economy may be slowing the face of the ongoing trade war with the US, wages and salary increases are still holding firm and China maintains its place in the global top ten for salary increases, said Lee Quane, Regional Director – Asia at ECA International.
It will be interesting to see whether this holds up into 2021 and beyond though if Chinese growth continues to slow, he added.
Vietnam and Thailand
The emerging economies of Vietnam and Thailand both saw significant real salary increases, placing them in the global top five, with increases of 5.1% and 4.1% respectively, according to the survey results, ECA said.
“Workers in Vietnam and Thailand will both see further increases to their salaries as the nominal salaries expected to be given by employers stay well ahead of the low levels of inflation that these countries will see in 2020, Quane noted. “This has been a long-term trend for both countries, as productivity continues to grow, and inflation is controlled.”
The average real salary increase for workers in Hong Kong is forecast to be 1.4% above inflation in 2020, a slight increase on the 1.0% rise that workers saw in 2019, according to ECA.
Despite nominal salary increases staying at 4% next year, the predicted drop in inflation from 3.0% to 2.6% means that employees in Hong Kong will see a slightly better overall salary increase in real terms this year, Quane pointed out.
Although this is still lower than the overall Asia Paifi average, the fact that the nominal increase will remain at 4% in 2020, as it was last year, is surprising given the backdrop of the current economic situation in Hong Kong, he said.
However, this underlines the fact that many companies in Hong Kong need to continue to attract and retain staff even in this period of economic adversity for the city.”
Meanwhile, Singapore will see a lower real increase than last year, consequently the forecast 3.0% increase is slightly below the APAC average, ECA said.
Although the forecast real salary increase is set to be slightly lower in 2020 than the 3.3% employees in Singapore saw in 2019, workers will still see a larger increase than regional neighbours Hong Kong, Taiwan and Japan, survey results indicate.
“The notably low level of inflation that Singapore has seen over recent years, coupled with a tight labour supply and talent restrictions due to immigration constraints, means that salary increases will remain relatively high,” Quane said.
Workers in India and Pakistan see contrasting fortunes
India once again tops the table for average real salary increases in Asia, but now also tops the table globally in 2020 too, according to ECA.
The average real salary increase is set to be 5.4% for workers in India, said the firm.
“Salaries in India are set to rise significantly, with the 5.4% increase almost four times as high as the expected increase in Hong Kong. Despite inflation rising slightly from 2019 and the economy slowing slightly, workers based in India can expect to see another bumper increase to their salaries. However, unless growth picks up again salary rises of this scale may not be sustainable in the longer term” said Quane.
It will be a very different story for their neighbours Pakistan in 2020 though, who are the only APAC nation predicted to see a decrease in their real salary, he noted.
“The average real salary increase in Pakistan is forecast to be -3.0%, meaning that employees will be worse off than they were last year. Despite the nominal increase staying at a relatively high 10.0%, inflation has shot up as the rupee has depreciated. Inflation in Pakistan is forecast to reach 13.0% in 2020, exceeding the nominal increase and leaving workers out of pocket compared to 2019,” Quane explained.