Taiwan, 15 December 2016
According to the latest issue of the annual research by Mercer, a global consulting leader, a majority of the Asia Pacific’s emerging economies are forecasting higher salary increase percentages for 2017 than 2016 with projected rises particularly bullish in countries such as India and Vietnam.
Mercer unveiled the results of the ‘Compensation Planning for 2017’ for the region including predictions for hiring intentions and pay increases across Asia, Middle East and Africa. Figures and forecasts are based on Mercer’s Annual Total Remuneration Survey (TRS), and its bi-annual Market Pulse Surveys.
In 2017, the highest salary increases are forecasted for India (10.8%) and Vietnam (9.2%) while Taiwan slightly increases to 4.0%, slightly lower than the financial hubs Hong Kong and Singapore are forecast to see a 4.2% and 4.1% increase, respectively. Japan is forecasted to receive the lowest increase of 2.2%, followed by New Zealand (2.8%) and Australia (2.9%). Notably though, real wage growth (salary increase minus inflation rate) has also been steadily rising in the region, often reaching double digits in emerging markets despite inflation at its lowest for most countries. And, while forecasts vary quite widely across specific industries, in Taiwan, the strongest push is likely to come from the consumer and life science sectors. (Figure 1 and 2 in notes).
A closer look at pay parity (in terms of annual total cash) reveals that there are now several ‘tiers’ of countries across the region. For example, in Australia, Japan and Korea, starting salaries begin at US$30k p.a., and rise steeply as employees reach senior levels, often reaching US$250–350k. Starting salaries in Taiwan begin at US$16K-20K for master and new graduates. In some countries – China, most notably – the highest-ranking executives out-earn their peers in the US and UK, Although it is important to note that this picture changes once long-term incentives (LTIs) and European social security benefits are factored in. Talent scarcity plays a major role here, and there are extremely high premiums to be gained by those people with the right skills, in addition to local language expertise.
Jeannie Liu, Career Leader at Mercer Taiwan said, “Hiring, retaining and engaging skilled talent will continue to be a top priority, especially for consumption-driven industries such as life sciences and consumer goods. The intelligent use of workforce data can help organizations easily identify the areas of highest impact by the workforce tsunami caused by the changing business environment.”
We also see that more companies in Taiwan have growing concerns on workforce diversity – aging workforce and gender equality. In 2016, the median age in Taiwan is 40. By 2050, it will increase to 56, which means over 65s will represent 30% of population in Taiwan and is the highest among Asia Pacific. According to a live poll conducted at Mercer’s Annual Total Remuneration Survey meeting held in Taipei and attended by over 150 C&B and HR leaders, more than 50% respondents reported preparing for their retirement but only 14% respondents reported being satisfied with the retirement savings plan provided by their employers. So, what matters most to the baby boomers?
“There is no longer one benefit/retirement plan fits all. Developing differentiated employee value propositions to appeal to different employee segments are essential.” She adds, “Another growing challenge is that women continue to be underrepresented in in management roles in Taiwan. It was surprising that around 70% poll respondents placed gender equality as one of the top concerns for HR nowadays. Hence organizations and leaders need to think and act differently to help women thrive and be prepared to address this challenge without hesitation.”
Amidst increasing volatility and uncertainty in the economy, the Asia Pacific region stands out as an outlier to the developed world. Emerging markets continue to lead world growth, driven by domestic demand: Asian GDP in 2017 is forecast to be an average of 4.2%, with some markets as high as 7-8%, while Taiwan GDP projections is 1.9%, which is much lower than other countries according to IMA Asia September Edition 2016.
While growth in China is likely to fall in 2017, India is forecast to see the highest growth rate in the whole region next year with 7.8%, while the Philippines, Malaysia, Thailand and Indonesia are all expected to see their economies double by 2020. Prevalent inflation rates are projected to be just over 3% in 2017, marginally ahead of the global average.
Similar to last year, continued worrying news for employers as research again reveals doubt-digit turnover rates in almost all Asia Pacific countries, with the exception of Japan and New Zealand. Voluntary turnover rates have continued to increase year-on-year. The rising numbers represent a challenge in terms of replacement costs in the form of higher salaries for new joiners, recruitment costs and lost production, all of which adversely impacts overall cost of operations and margins that are already under close scrutiny. 55% of companies in Taiwan report having difficulty filling-in vacant positions, as compared with 48% companies in Asia and 38% of the companies globally struggling to find the right talent to fuel their business expansion.
Notes to Editors:
Figure 1: Forecasted GDP, inflation and salary increase; Source: Total Remuneration Surveys
Figure 2: Projected Salary forecast for 2017 and increase for 2016 (x), by industry; Source: Asia Pacific Pulse Survey Q3 2016; Some forecasts in the press release have been revised based on latest data
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