There’s been a lot of speculation about what a China-US trade war could mean for the Asia Pacific region and the “uncertainty economy” it’s creating. While Wall Street may be twisting and turning in discomfort, business leaders across Asia appear to be maintaining their confidence – particularly when it comes to making reward decisions. In fact, our 2019 salary forecasts again expect Asia to have the highest real-wage growth globally at 2.6 percent on average, down slightly from 2.8 percent in 2018.
Of course, the circumstances behind this figure vary across the region, with different stories emerging from developed and emerging economies. In China, that story is about slower growth in 2019, with real-wage growth predicted to be 3.2 percent, down from 4.2 percent last year. While in Japan, salaries will effectively remain flat, with a real-wage prediction of just 0.1 percent for 2019 compared to the 2018 prediction of 1.6 percent.
Vietnam and Singapore buck the trend
While growth in Asia is easing slightly, our real-wage forecasts for Vietnam (4.8 percent, up from 4.6 percent) and Singapore (3.0 percent, up from 2.3 percent) are an exception to the rule.
Singapore’s service-driven economy remains hungry for highly-skilled workers, keeping the pressure on wages. “We’ve seen changes in the market drive the highest base salary movements in the oil and gas sector (at 4 percent), as well as transportation, hi-tech, chemicals and public sector (all at 3 percent), while we saw the lowest changes in the industrial goods sector (close to 2 percent)” says Mirka Kowalczuk, Head of Pay and Engagement Delivery, APAC, Products Group, Korn Ferry.
In Vietnam, growth is driven by a young and growing population and attractive conditions for foreign investment. “It’s important to note that although those increases are higher than in many other countries in the region,” says Kowalczuk, “the market still has a long way to go to catch up with salary levels in more mature markets, like Singapore and Korea, where salaries are on average over 3 times higher for operational workers.”
Malaysia takes a “wait and see” approach
Business leaders in Malaysia are more circumspect, with signs of an economic slowdown emerging. We’re still expecting to see real-wages increase by 3.6 percent across industries in 2019, with the the telecommunications and media sector predicted to see the highest increase in 2019, up 0.4 percent to 6.0 percent. The insurance and oil and gas sectors are expected to see the smallest increases in median base salaries, up 0.2 percent from 5.4 and 4.2 percent respectively. The industrial products sector is the only exception as median base salaries are predicted to decrease by 0.2 percent to 4.9 percent.
“As growth is expected to slow, we would recommend that companies review their remuneration cost drivers,” says Halim Ariff, Country Manager for Products Group, Korn Ferry. “This enables businesses to ensure their remuneration strategy is consistent with the changing business environment and market conditions.”
Hong Kong looking to China
We expect Hong Kong to see salary increases around 4 percent in 2019. This forecast is similar to what we saw in 2018, but the final increase will be subject to how both the global and Chinese economies perform. “Given the low unemployment forecast of 2.8 percent to 3.0 percent in 2019, we could still see pressure to increase salaries,” says Robert Li, Senior Client Partner, Advisory, Korn Ferry Hong Kong. “In addition, the China Big Bay Area initiative will have a positive impact on the Hong Kong economy in the long run, and that could boost salary increase expectations.”
About the study
The data was drawn from Korn Ferry’s pay database which contains data for more than 20 million job holders in 25,000 organisations across more than 110 countries.
It shows predicted salary increases, as forecasted by global HR leaders, for 2019 and compares them to predictions made at this time last year regarding 2018. It also compares them to 2019 inflation forecasts from the Economist Intelligence Unit.
Our interactive site with more detailed figures, and a downloadable infographic with headline figures for each country is here.