- Overall salary increase forecast in Thailand is 5% across industries
- Automotive industry projected to have highest salary increase with 5.5%
- High tech industry has the highest involuntary turnover rate at 7%
Bangkok, 6 November 2019 - Mercer today announced the results of its annual ‘2019 Thailand Total Remuneration Survey,’ a study which identifies key remuneration trends and makes hiring and pay increase predictions for 2020. Figures and forecasts are based on the Total Remuneration Surveys – Mercer’s flagship annual compensation and benefits benchmarking study, with participation increasing to 607 companies this year in Thailand across various industries. 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.
The 2020 salary increase forecast across key industries in Thailand remains stable at 5%, consistent with the low rate of inflation projected at 1.1% (1.0 in 2019).1 The automotive sector is forecast to have the highest salary increase with 5.5%, while the chemical industry salary is likely to see a slight increase with a forecast of 5.2%.
The forecast variable bonus trend across all industries that plan to pay for 2019 performance is 2.3 times the monthly base salary. The automotive industry is predicted to pay the highest variable bonus at 3.6 times the monthly base salary when compared with other industries, followed by the life insurance and high tech industries, which plan to pay a variable bonus of 2.5 times the monthly base salary.
VOLUNTARY ATTRITION TRENDS
Across industries, the voluntary turnover rates were on the rise last year with the turnover rate increasing to 12.8% in 2018 (as compared to 12.5% in 2017). However, according to the latest data from Mercer’s Asia Market Pulse Survey, in Q1 2019 the voluntary attrition rate seems to have stabilized and remained the same as Q1 2018 [4%].
While the top reasons cited for employees leaving their organization in Asia varies by age group and gender, in general the top three reasons for employees leaving their organization are competitive pay, manager interaction, and clear career path and job security. [Source: Mercer Asia Pulse Survey 1H 2019 and 2019 Global Talent Trends Study]. The high tech industry in Thailand has the highest involuntary turnover rate at 7% and this can be attributed to the increasing role of technology and the need for organizations to adapt to automation and digitalization.
The hiring trend in Thailand in 2020 is expected to drop slightly with 29% of organizations planning to add new hires compared to 31% in 2019. Given the stabilizing voluntary turnover rate, the focus of most organizations is on upskilling and retaining key talent.
Piratat Srisajalerdvaja, Mercer Thailand’s Career Product Leader said, “The jobs we are familiar with today are disappearing and the emphasis on access to new skills needed for the future workforce will impact the way we define and benchmark jobs in the future.”
“To cope with the demand for digital skillsets, companies are paying a premium for discrete skills or relying on broadly defined jobs to give them the scope to bring in or build these skills. We anticipate that work will morph into ‘skill clusters’ which will become the foundation of base salaries in the future. Rather than being merely technical or functional skills, a skill cluster is more holistic and includes both cognitive and behavioral skills,” Srisajalerdvaja said.
“Digital transformation forms a key part of Thailand’s national agenda with the Thailand 4.0 Master Plan and Digital Economy Plans (2018-2021) and in order to attract, retain and grow, companies need to adapt to the new digital reality and an evolving workforce,” Juckchai Boonyawat, CEO of Mercer Thailand said.
“Faced with changes including digital disruption, an aging population and gig or contract workers, companies in Thailand need more than ever to revisit their total rewards and compensation and personalize and incentivize the experience for each of their diverse employees. A number of companies have already implemented flexible benefits programs and pay-for-performance incentive models to meet these challenges,” Boonyawat added.
SHIFT TO AGILE REWARDS
As new roles are created and existing roles change with automation and AI, it is becoming more difficult to keep up with employee pay expectations and market values. According to Mercer’s 2019 Global Talent Trends Study, the number 1 workforce rewards priority is offering more diverse rewards. The good news is that HR’s priorities reflect what employees are asking for, both HR and employees agree that offering a wider variety of incentives and differentiating rewards for high performers will make a difference. To truly align to the business, investments in rewards should reflect a company’s strategic focus. In many cases, this means taking a step away from market norms and moving towards more differentiated offerings to satisfy both changing employee needs and the demand for new skills. Leading firms are focusing on the overall pay experience and expanding the focus beyond base pay to include career growth, incentives, and recognition.
Puneet Swani, Senior Partner and Career Business Leader for the International Region at Mercer said, “As the pace of change accelerates and we enter into this new world of work, companies should rethink how they can be future fit by putting their people at the heart of the change. Whether embracing digitalization, building competencies and skills needed for future competitive advantage or creating the right work environment and culture, changing the way organizations invest in their employees will yield a greater return for the business far into the future.”
For more data and insights from the Thailand 2019 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 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan Companies (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people with 76,000 colleagues and annualized revenue approaching $17 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.asean.mercer.com. Follow Mercer on Twitter @Mercer.
1. IMA Asia, Asia Pacific Executive Brief, October 2019