At first glance, Korn Ferry’s 2020 global salary forecast tells a familiar story, but there’s a twist in the tale. While 2020 salary increases across the globe are expected to grow at 4.9% – about the same rate as 2019 – slowing inflation means employees will see an increase in the real-wage salary they take home at the end of the day.
The same goes for Singapore, where real-wage salaries are estimated to increase by 3.6%, up from 3.0% last year. While the headline forecast for 2020 of 4% is similar to last year’s forecast, Singapore’s low inflation rate of 0.4% has given real-wage increases a boost. The pressure for salary increases is being seen most acutely in mid- and senior-level roles as well as in some hard to recruit for roles, creating some strategic talent acquisition challenges for Singaporean businesses in 2020.
The global picture
Around the globe, salaries are predicted to grow at a rate of 4.9% in 2020. With a predicted global inflation rate of approximately 2.8%, the real-wage salary increase is expected to be 2.1%. So while the 2019 salary growth rate was a touch higher at 5.1%, a higher global inflation figure of 4.1% meant 2019 real-wage salary increases across the globe were only 1.0 percent
This feels like good news for employees. And of course, in many ways it is. But it also may reflect a shifting economic outlook that may mean slower growth in several key countries and an increased risk of higher unemployment.
Highest real-wage growth in Asia
Asian economies can again expect to see the highest salary increases globally. The topline 2020 forecast is for a 5.3% increase, with real-wage salaries expected to increase 3.1% (up from 2.6% last year) as inflation drops to 2.2%.
While the headline figures tell a good story, a patchwork of regional economies sits behind them. China’s real-wage growth for 2020 is expected to weaken to 2.9%, continuing the downward trend from 3.2% last year and 4.2% the year before. Other mature economies, including Singapore, are predicted to see increases, with Japan looking at a real-wage increase of 0.6%, up from 2019’s prediction of 0.1%. In Hong Kong, political uncertainty and a relatively high inflation rate of 2.6 percent has translated to a more modest real-wage growth forecast of 1.4%.
Singapore’s businesses need to take a focused approach to wage increases
The ongoing situation in Hong Kong and geo-political uncertainty in other parts of Asia is creating specific talent challenges for Singaporean organisations. It’s possible 2020 could see international and MNCs reconsidering Singapore as the main location for ASEAN and APAC head offices as they look for a stable home base. This will keep the pressure on mid- and senior level wages in Singapore in contrast to the easing conditions in China as a result of the economic slowdown and US-China trade war.
The second key challenge for Singapore’s businesses specifically affects engineering, IT and sales roles. Almost 38% of respondents to Korn Ferry’s 2019-20 annual salary and benefits survey indicated they’re facing difficulties in filling these roles and the challenge is only likely to increase as the full brunt of talent crunch begins to take effect in 2020.
Organisations will need to strategically target salary increases to attract and retain the right people in these critical senior and hard-to-fill roles. Creating a fulfilling employee experience that encourages engagement and focuses training and development on building a pipeline for these roles internally will also ensure organisations have the people they need for success through 2020 and beyond.
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 130 countries.
It shows predicted salary increases, as forecasted by global HR leaders, for 2020 and compares them to predictions made at this time last year regarding 2019. It also compares them to 2020 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.