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 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%.

 In Indonesia, topline growth is expected to be 8.1%, with real-wage growth at 5.1%. The figures for Malaysia and Thailand are very similar with both countries predicted to see topline growth at 5.1% and real-wage growth at 3.5% and 3.7% respectively. 

Indonesia expecting higher than average increases compared to other Asian economies

The talent war continues to be the main concern for many Indonesian organisations and it’s shaping their remuneration strategies. “While some companies continue to compete strictly on remuneration, others are opting to build a total rewards approach that includes elements targeted to meet both the extrinsic and intrinsic needs of their talent and to stay attractive in the market,” says Amanda Ryadi, Principal, Advisory, Korn Ferry Indonesia.

For the extrinsic aspect, many organisations are focusing on paying for performance as variable pay becomes the key driver to achieve productivity, cost optimisation and risk management targets. On the other hand, the intrinsic aspects is emphasise career development and flexible benefits, including flexible working arrangements. This approach shifts the focus of the organisation’s reward strategy away from mere hygiene, requiring leaders to really understand what their talent want.

Thailand sees stable wage growth, while digital is turning up the heat

As many Thai organisations turn their business focus towards capitalising on new and emerging trends, they’re looking for a competitive edge through applying digital technology. Businesses are also facing challenges in integrating their multi-generational workforce as they respond to the changing needs of younger generations while trying to shift legacy structures and ways of working ingrained in older generations.

Thanwa Chulajata, Country Manager for Korn Ferry Digital Thailand is seeing businesses increasingly focusing on how their HR systems can respond to different generational needs. “One system applied to all doesn’t work well anymore,” says Chulajata. “Younger generations want more challenging jobs, more flexibility in their work environment, more agility in learning and doing, higher competition in the market, higher pay and fast-track career growth.” A more holistic approach to reward needs to consider how these elements meet the intrinsic needs of their employees, alongside traditional extrinsic rewards.

Malaysia considers the real cost of living in weighing real-wage increases

Malaysian employers are budgeting for the same level of salary increase for 2020 as they had for 2019. With the 2020 inflation forecast at 1.5%, the real wage increase in 2020 is 3.5%, a marginal drop from 2019’s real wage increase of 3.6%. However, there’s been a lot of discussion that the inflation rate is not reflective of the rising cost of living in Malaysia. The government is working on developing a new index that can provide better accuracy on the cost of living which can be used alongside the inflation rate to shore up efforts in addressing the rising cost of living and the diminishing real wage increase.

 “With the growing rhetoric to address living wages and the increasing pressure to deliver shareholder’s returns in a challenging business climate, we are having more conversations with companies on how they can manage their wage bill more sustainably, and ensuring more inclusion through longer term efforts like upskilling,” says Mary Chua, Korn Ferry Kuala Lumpur. “Wage growth needs to be in tandem with productivity increases, if not these costs will eventually be passed on to consumers and perpetuate the rising cost of living.”

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.


 Mary Chua, Senior Client Partner and Rewards and Benefits Practice Leader for APAC, Korn Ferry Thanwa Chulajata, Country Manager for Korn Ferry Digital Thailand
Amanda Ryadi, Principal for Korn Ferry Advisory, Indonesia
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