Projected salary hikes surprisingly positive
Reality of rising inflation main reason why pay in Asia-Pacific tipped to rise faster in 2009
By CHUANG PECK MING
(SINGAPORE) The projected 2009 salary hikes for Singapore and the Asia-Pacific region look surprisingly high, especially against a background of slowing economic growth in the region.
But high expectations are quickly brought down to earth when the reality of rising inflation is shaking consumers’ confidence everywhere.
Indeed, inflation is already making a comeback as a key factor in pushing pay increases - and it is one main reason why salaries in the Asia-Pacific countries are tipped to rise faster in the coming year.
HR Business Solutions (HRBS), an Asian compensation firm, has projected that pay in the Asia-Pacific will jump by a median 8.0 per cent in 2009, against a median increase of 6.7 per cent in 2008.
Among the more developed countries in the region - Japan, Australia, New Zealand, Singapore and Taiwan - the forecast is for salary hikes of 3.5-5.9 per cent next year, with Japan at the lower end and Singapore at the top end.
Developed South Korea is the odd man out. Pay there is expected to shoot up by 8.0 per cent in 2009, up from 6.7 per cent in 2008.
While Singapore is likely to see the biggest jump in salary next year among the region’s more developed countries, bar South Korea, the hike is only slightly higher than in 2008, when pay here rose by an average 5.6 per cent.
Salaries in Hong Kong, Singapore’s closest economic rival, are projected to climb 5.3 per cent next year, against a 4.9 per cent rise in 2008.
While inflation figures in the salary projections for Singapore and Hong Kong, talent also remains scarce - even as the job creation machinery is showing fatigue.
‘These two economies’ labour markets are small and tight, caused by robust economic growth and outflow of managerial and professional talents to emerging economies,’ HRBS says in a report.
‘In recent months, prices have climbed rapidly and inflation rate has reached new heights after a decade of stability. Hence despite a lower growth rate projected for 2008, employers in Hong Kong and Singapore are forecasted to grant more pay rises in 2009.’
Region-wide, inflation appears to be a key consideration for HRBS’ higher forecast for 2009.
‘While economic growth rates in Asia are mostly forecasted to be moderately lower in 2008 relative to 2007, inflation rate across the Asia-Pacific region has soared to an all-time high,’ it says in its report.
The labour market continues to be tight in countries such as China, India and Vietnam - especially for ‘qualified’ staff, according to the report.
Japan, where the threat of recession has again surfaced alongside the fear of inflation, is likely to see the smallest pay increase in the region next year - 3.5 per cent, up from 3.3 per cent in 2008.
The biggest salary hike? That’s projected for Sri Lanka, where pay is expected to jump 17 per cent.
‘Sri Lanka’s inflation rate of more than 16 per cent is the next highest in Asia after Vietnam,’ the report says. ‘Companies in Sri Lanka are hiring and as in other emerging countries, recruiting and retaining skilled human capital is challenging.’
In Vietnam, where the inflation rate has surged to 25 per cent, pay is tipped to rise 12.4 per cent in 2009.
Source : Business Times - 08 Sept 2008
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