Mercer today unveiled the results of its annual ‘2018 Thailand Total Remuneration Survey’ study which identifies key remuneration trends and makes hiring and pay increase predictions for the coming year across Asia, Middle East and Africa. Figures and forecasts are based on the Total Remuneration Surveys – Mercer’s flagship annual compensation and benefits benchmarking study, with participation from over 560 companies in Thailand across various industries this year.
Against a backdrop of continued strong economic and real wage growth (salary increase minus inflation rate) in emerging markets, the highest salary increases in 2019 are forecasted for Bangladesh (10%), India (9.2%) and Vietnam (9.8%). At the other end of the spectrum, Australia is at 2.6% and New Zealand at 2.5%, and Japan has the lowest expected salary growth rate at 2%.
A closer look at pay parity (in terms of annual total cash) reveals that there are now several ‘tiers’ of countries across the region. For example, in Australia, Japan and Korea, starting salaries begin at US$30k p.a., and rise steeply as employees reach senior levels, often reaching US$250–350k. Starting salaries are much lower (often just US$5k) in low-cost manufacturing bases, but again increase significantly at top management levels.
In some countries – China, most notably – the highest-ranking executives out-earn their peers in the US and UK, although it is important to note that this picture changes once long-term incentives (LTIs) and European social security benefits are factored in. 26% of organizations in Asia reported a retention bonus provision for employees with specific digital skills.
Mercer’s study reveals that talent scarcity plays a major role in shaping remuneration trends. 48% of companies in Asia report having difficulty filling-in vacant positions, compared with the 38% of companies globally that are struggling to find the right talent to fuel their business expansion. Subsequently, a significant premium is being paid for employees in specialist sales and engineering roles, in addition to local language expertise. The rising numbers represent a challenge in terms of replacement costs in the form of higher salaries for new joiners, recruitment costs and lost production, which adversely impact the overall cost of operations and resulting margins.
Puneet Swani, Partner and Career Business Leader for the International Region at Mercer said, “As the world’s engine of growth, Asia continues to see sustained demand for skilled talent, with digital skills continuing to draw a premium. Companies are offering generous incentives and retention bonuses. We also find companies deleveraging pay in the wake of increased regulatory scrutiny of discretionary bonuses, reducing year-end pay-outs and increasing base pay in order to contain excessive risk-taking.”
“Companies in Asia Pacific are taking a more holistic view of their total rewards philosophy and employers are increasingly focusing on the experiential components of rewards – programs to deliver meaningful career experiences and flexible arrangements, as well as programs to help manage the physical, financial and emotional well-being of their employees beyond base pay,” Mr. Swani added.
Thailand Digital Economy 4.0 or the national agenda and the recent digitization of business models make the message around the need for companies to transform aptly clear. With one of the lowest unemployment rate in SE Asia and a rapidly ageing workforce, the search for skilled talent has become ever more difficult. For HR practitioners, the implication is clear: they must bring in agility in the organization through a focus on upskilling and redesigning of jobs. HR practitioners can also tap into the extended talent ecosystem, comprising of multiple talent pools—including contractors, freelancers, partnerships and crowdsourced, while building a more inclusive workplace, one that embraces older workforce.
To effectively manage this extended talent ecosystem, we must rethink our Employee Value Proposition (“EVP”) by creating rewards that reinforce employees’ emotional connection to the organization and its vision. This can be achieved by introducing personalized total rewards packages that resonate with employees’ needs, lifestyle and personal aspirations.
Companies should leverage available digital tools to deliver a truly fluid, real-time and engaging experience at work. With a myriad of choice of technologies, organizations must develop a clear digital HR roadmap aligned with the overarching transformation agenda.
Dr. Ake Ayawongs, CEO and Partner of Mercer (Thailand) Ltd. said, “The future of work poses great opportunities as well as risks for organizations in Thailand. Organizations that can adopt more agile workforce models and offer more personalized and flexible employee value propositions are likely to thrive. Those that cannot do so may struggle in the long run.”
For more data and insights from the 2018 Total Remuneration Survey please see here.
Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With nearly 65,000 colleagues and annual revenue over $14 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. Marsh & McLennan Companies is also the parent company of Marsh, which advises individual and commercial clients of all sizes on insurance broking and innovative risk management solutions; Guy Carpenter, which develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities; and Oliver Wyman, which serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.