Asia, 21 December 2021 – Companies in Asia Pacific are forecasting a median 5.4% increase in overall salaries for 2022 amid uncertainty as economies start to reopen, compared to 5.1% in 2021 and 4.8% in 2020, according to Mercer’s latest Salary Movement Snapshot Survey1. Slightly higher than the pre-pandemic levels, the projected salary increments reflect a faster and stronger economic rebound when compared to the Global Financial Crisis, with real Gross Domestic Product (GDP) growth expected to increase by 5.1%2 in 2022.
According to the International Monetary Fund, Asia Pacific remains the fastest growing region in the world, but the gap in economic recoveries across the region is widening, with risks tilted to the downside due to uncertain pandemic dynamics as well as vaccine coverage and efficacy against new virus variants.
Excluding companies that have implemented wage freezes, Pakistan (9%) has the highest projected salary increase in 2022, followed by India (8.7%) and Bangladesh (7.8%). Japan, New Zealand and Australia are the lowest at 2.3%, 2.6% and 2.8% respectively. Hong Kong (3.5%), Singapore (3.5%), Malaysia (4.5%), Philippines (5%) and Thailand (5%) came in below the regional median of 5.4%, while Indonesia came in above at 6.5%.
Puneet Swani, Mercer’s Career Business Leader for Asia, Middle East, Africa and the Pacific, said, “The projected salary increments highlight a divergence in pay progression between emerging and developed economies. We are seeing markets that have kept COVID-19 under control reporting higher than average pay raises. Even though recovery is uneven across the region, companies are showing renewed business confidence as well as getting used to working with the pandemic and this is reflected in the rebound in salary increments.”
Across the industries surveyed, the Chemicals industry is expected to see the biggest rebound in salary increment at 5.5% in 2022, up from 4.9% in 2021. Other industries such as High Tech and Consumer Goods also saw increases over prior year. Overall, the Consumer Goods industry will see the highest increases in salaries for 2022 at 5.8% while the Retail industry will see the lowest increase at 4.3% across the region.
Commenting on the industry salary trends, Mr Swani said, “Industries that were relatively immune to the impact of the pandemic, such as Consumer Goods, Chemicals, Life Sciences and High Tech, are providing merit salary increases as usual. However, industries negatively impacted by the pandemic and more vulnerable to uncertainties like borders opening up and the return of tourism, are seeing the impact on their operations, business performance and eventually compensation. These include the Hospitality, Airlines, Retail and Luxury Goods sectors.”
Companies across APAC to boost hiring
Hiring across the region has also accelerated in the second half of 2021, as businesses shift their attention from reducing staff to hiring more, albeit still not at pre-pandemic levels.
Recruitment efforts are expected to increase in 2022, with more than three in 10 companies on an average intending to add headcount with another third undecided, compared to less than two in 10 in 2021. Moreover, only 2.8% of Asia Pacific employers indicated they have plans or are considering to implement further layoffs and workforce reductions next year, compared to 7.8% in 2021.
Mr Swani added, “Despite the impact of the pandemic on global unemployment, employers in many markets are having difficulty finding talent especially with very limited talent mobility across countries due to border restrictions, and companies are looking to attract and retain their employees with more competitive compensation and benefit packages.”
Companies offer more flexibility and prioritize skills
To address talent attraction and retention issues, organizations are putting greater emphasis on flexible work and pay-for-skills approaches.
Employers who successfully reshape their workforce and total rewards models would gain an advantage in retaining talent and keeping employees engaged and productive even as they move beyond the pandemic. Mercer’s 2021 Flexible Working Policies & Practices Survey show that 54% of companies in Asia Pacific have implemented or are actively developing a long-term flexible working strategy. With minimal impact on productivity, collaboration or employee development, more employers are also willing to offer either part-time remote working (76%), flex-time (75%) or full-time remote working arrangements (32%) as part of their future of work policy, up 46%, 12% and 22% respectively in relation to pre-pandemic levels.
Employers are also recognizing the value of knowing what skills reside within the organization, how demand for skills can swiftly shift with the market, and the importance of deploying or developing existing employees to meet changing needs. As skills begin to overshadow education or experience, more companies are implementing skills-based pay practices to attract new talent and retain critical skills. However, only 16% of companies in Asia Pacific formally monitor the market demand for skills.
Mr Swani added, “Adopting skills-based pay approaches, either by replacing or complementing existing job-based models, creates a competitive edge in today’s changing business environment by supporting the attraction, development and retention of critical skills. In the near future, jobs are no longer going to be the organizing unit of work but skills would be. Employers must increase focus on pay for skills across the employee life cycle that is aligned with overarching rewards and talent strategies to future-proof their workforces for whatever upheavals that may come.”
About Mercer’s Total Remuneration Survey
The Total Remuneration Survey, Mercer’s flagship annual compensation and benefits benchmarking study, identifies current pay practices and benefits policies, as well as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulse surveys throughout the year to keep up with the impact of the rapidly changing business environment and compensation and workforce trends.
For more data and insights from Mercer’s Total Remuneration Survey 2021, please see here.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 81,000 colleagues and annual revenue of over US$19 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.
1 Mercer’s 2021 E3 Salary Movement Snapshot survey was conducted in July and August 2021 that polled 1,730 organizations globally.
2 World Economic Outlook, International Monetary Fund, April 2021