- Forecast salary increase for Hong Kong in 2019 is 3.9%, with life sciences (4.1%) and retail (4.1%) the sectors projected to have the highest increases next year
- With continued strong economic and real wage growth emerging markets, the highest salary increases in 2019 are forecast for Bangladesh (10%), India (9.2%) and Vietnam (9.8%)
Mercer today unveiled the results of its annual Compensation Planning Study which identifies key remuneration trends and makes hiring and pay increase predictions for 2019 across Asia, Middle East and Africa. Figures and forecasts are based on the Total Remuneration Surveys – Mercer’s flagship annual compensation and benefits benchmarking study – with participation from over 500 companies in Hong Kong across different industries this year.
Against a backdrop of continued strong economic and real wage growth (salary increase minus inflation rate) in emerging markets, the highest salary increases in 2019 are forecast for Bangladesh (10%), India (9.2%) and Vietnam (9.8%). At the other end of the spectrum, Australia (2.6%), New Zealand (2.5%) and Japan have the lowest expected salary growth rate at 2%.
Overall salary increases in Hong Kong are projected to be 3.9% in 2019, slightly higher than this year’s 3.8%.
“Despite some variations across Asia Pacific, the overall hiring outlook is positive, with 66% of companies looking to maintain headcount in order to seize diversification and growth opportunities in the face of ongoing disruption,” said Puneet Swani, Partner and Career Business Leader for the International Region at Mercer. “Mercer continues to dedicate resources into understanding these trends, so our clients can plan more effectively and their employees can be appropriately engaged and rewarded,” he added.
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 are much lower (often just US$5k) in low-cost manufacturing bases, but again increase significantly at top management levels.
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. 26% of organizations in Asia reported a retention bonus provision for employees with specific digital skills.
Mercer’s study reveals that talent scarcity plays a major role in shaping remuneration trends. 48% companies in Asia report having difficulty filling-in vacant positions, compared with the 38% of companies globally that are struggling to find the right talent to fuel their business expansion. Subsequently, a significant premium is being paid for employees in specialist sales and engineering roles, in addition to local language expertise. 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, which adversely impact the overall cost of operations and resulting margins.
“As the world’s engine of growth, Asia continues to see sustained demand for skilled talent, with digital skills continuing to draw a premium,” continued Mr Swani. Companies are offering generous incentives and retention bonuses. We also find companies deleveraging pay in the wake of increased regulatory scrutiny of discretionary bonuses, reducing year-end pay-outs and increasing base pay in order to contain excessive risk-taking.”
“Companies in Asia Pacific are taking a more holistic view of their total rewards philosophy and employers are increasingly focusing on the experiential components of rewards – programs to deliver meaningful career experiences and flexible arrangements, as well as programs to help manage the physical, financial and emotional well-being of their employees,” Mr. Swani added.
Overall salary increases in Hong Kong are projected to be 3.9% in 2019, up from 3.8% this year. Most industries are expected to see a rise in salary increases, with the exception of the logistics sector.
In terms of types of roles most likely to fetch increases, life sciences and retail sectors projected to have the highest increases in 2019. Increases rate in the life sciences sector remain flat at the same rate seen in 2018 (4.1%), while the retail sector shows a positive increase from 3.7% in 2018 to 4.1% in 2019.
Peter KH Chan, talent consultant for Mercer in Hong Kong said, “Hong Kong’s unique position in the Greater Bay Area gives local and international employers more factors to consider in differentiating innovative health and other benefits to retain employees and attract talent. Due to the flow of capital, people and information in this area, we believe the competitiveness of compensation and benefits will be crucial in helping talent choose their career moves.”
For more data and insights from the 2018 Total Remuneration Survey please see here.
Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With nearly 65,000 colleagues and annual revenue over $14 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. Marsh & McLennan Companies is also the parent company of Marsh, which advises individual and commercial clients of all sizes on insurance broking and innovative risk management solutions; Guy Carpenter, which develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities; and Oliver Wyman, which serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.