12 November 2020
Salaries in Thailand are projected to increase in 2021 despite the financial impact from the coronavirus pandemic. While companies in Thailand initially forecasted an average 5% overall increase in salaries for 2021 when surveyed in the first half of 2020, further surveys reflect a moderation at around 3%.
This is according to the annual Thailand Total Remuneration Survey (TRS) 2020 by Mercer, a global consulting leader in talent, health, retirement, and investments. The survey polled 577 companies across multiple industries in Thailand between April and June this year, with additional surveys conducted in July and August in light of the fast-changing market environment.
Piratat Srisajalerdvaja, Mercer’s Career Products Leader for Thailand said, “Given the sustained uncertainty in the economic environment, companies are taking a more cautious approach, reviewing and revising their salary increment budgets. Two in five companies have indicated that COVID-19 has impacted their planned increases for 2020.”
The projected salary increments come on the back of a weak economic outlook for Thailand, with Gross Domestic Product (GDP) expected to contract by 7.8% in 20201. Even though the economy is forecasted to rebound by 3.5% in 2021, the future remains clouded with uncertainty.
Salary increment declines for the first time in a decade
While only 22 companies out of 577 surveyed reported a salary freeze in 2020, the overall median salary increment for 2020 was adjusted to 3.7%, compared to the budgeted 4.8%. This marks the first time in a decade that salary increments have dipped below 5%, with varying impact across industries.
Mr. Piratat said, “Salary increases in industries such as high tech, automotive, manufacturing and transportation equipment were above the overall average due in part to the nature of their industry. The High Tech industry saw increased demand as a result of remote working, while the Automotive industry’s strong labour union kept salary increments stable. The consumer goods industry, which is among the hardest hit due to a slump in household spending, saw the smallest increment at 2.5%.”
Variable bonuses for 2020 remain stable, but decreases expected in 2021
Overall, budgeted bonuses for 2020 increased slightly at 2.3 months, compared to 2.2 months in 2019, with the High Tech and Chemical industries seeing the highest increase. Only 5% of companies surveyed did not provide any bonuses.
Looking ahead, 28% of companies expect the bonus payout for 2021 to less than the previous year, while 39% say it is too early to tell. Only 5% of companies expect budgeted bonuses to increase in 2021.
Juckchai Boonyawat, Mercer’s CEO for Thailand said, “By and large, companies are still watching and waiting, closely monitoring the situation as they review their compensation strategies for 2021. That said, there is cautious optimism as companies are increasingly reporting positive hiring sentiments especially for business critical positions and jobs that cannot be replaced by automation or AI. Amidst the overall uncertainty, more businesses have increased their headcount this year compared to those who reduced their staff.”
By the end of 2020, 23% of the companies surveyed would have added new employees, with 19% expressing plans to recruit staff in 2021.
Mr. Juckchai added, “While the future continues to hang in the balance with cost pressures top of mind for many employers, we encourage companies to take a longer term and more holistic view on their reward packages for employees. Companies should seize the opportunity to review their total rewards strategy and look beyond financial remuneration to consider the overall well-being of their employees through continued professional development and health and wellness initiatives. Employee engagement and retention will be more critical than ever in the road to recovery for businesses.”
About Mercer’s Total Remuneration Survey
The Total Remuneration Survey, Mercer’s flagship annual compensation and benefits benchmarking study, identifies current pay practices and benefits policies, as well as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulse surveys throughout the year to keep up with the impact of the rapidly changing business environment and compensation and workforce trends.
For more data and insights from the Mercer’s Thailand Total Remuneration Survey 2020, please see here.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 83,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.