Employers in Asia Pacific (Apac) are boosting their salary increase projections for 2022, fueled by tight labour markets and the rise in inflation, according to the latest Salary Budget Planning Survey Report by Willis Towers Watson (WTW).
The survey of 5,728 companies, conducted between October and November 2021, found two in five respondents (42%) are planning for higher salary budgets this year.
A quarter of the respondents (25%) have changed and increased their expected
salary increase budgets for 2022 from the original projections made in July last year. Companies in APAC are now budgeting an overall average increase of 5.08% for executives, management and professional employees, and support staff this year. Companies gave employees an average pay increases of 4.62% in 2021.
Edward Hsu, business leader, rewards data and software, Asia Pacific, WTW, said:
“There seems little doubt that costs, wages and prices are going up this year. Our study shows that employers are influenced by different factors in adjusting their salary budget projections this year. However, with Apac’s consumer price index (CPI) expected to hit 3% or even more in some markets, employers will most likely take living costs into account for salary increases.”
According to the study, one-third (30%) of employers cited the tight labour market for increasing their budgets from prior projections, while 23% cited anticipated stronger financial results and 19% on concerns related to cost management such as inflation and rising cost of supplies.
In addition, a shortage of manpower in some sectors is driving up demand for skilled workers, and a push for growth in others is igniting a war for talent as companies compete to attract and retain employees who have more choices than in recent years.
The total attrition rates in several markets such as Australia, Hong Kong, Singapore, South Korea and Thailand have increased significantly, with most now exceeding pre-pandemic levels.
“The labour market anticipates new joiners not only from the unemployed but also from the currently employed talent pool, prompting employers to closely look into their retention strategies.
“Whether an organisation is experiencing the Great Resignation or the Great Hire phenomena, having relevant and competitive pay and benefit packages remains critical to attracting and retaining talent. There is a great re-prioritisation of work, rewards and careers under way, and it’s putting significant pressure on compensation programmes for many employers,” added Edward.
“With an evolving pandemic situation, unstable talent market and changing pay
conditions, employers will need to monitor market trends and changes, and proactively review and adjust their company practices accordingly. Bigger pay rises alone will not be enough to help address their attraction and retention challenges.
Winning the talent race will require employers to continue to be creative and comprehensive with their Total Rewards strategy. It is also important to design a forward-looking rewards programme that is built for future success to support the business.”
