The disruption caused by COVID-19 has reshaped the future of work where flexibility is the new arrangement – in terms of location, time and rewards.


Almost 90% of organizations are planning to implement post-pandemic changes to flexible working, with 74% intending to permanently shift to more remote work, according to Mercer’s global surveys.


As companies worldwide evolve their workforce strategies, Thai organizations are facing similar pressures in talent management during this new era of flexible work.


With a shrinking talent pool due to an ageing population, Thai labour force participation has declined by more than 1.2 million people between 2012 and 2019. This means companies need to do more with less manpower, with a greater emphasis on keeping the workforce agile and relevant with up-to-date skills.


Central to this challenge is how companies reward and retain their employees, a priority that is especially pertinent in view of the rapidly changing business and work environment. How can Thai companies cater to a more flexible workforce as well as develop the skills they require for future success?


A vital solution lies in implementing a skills-based reward strategy. Employees will be motivated to upskill and enjoy clear career progression in this age of flexible work, paving the way for better business outcomes.

The great work disruption

The pandemic has accelerated the need for a new way of working due to greater digitalization and shifts in economic interests.


But every crisis comes with a silver lining with the reinvention of business and work models to increase employee engagement and work performance. 


The physical workplace is now replaced with a new hybrid style of working. The workweek is also being redefined to fit employees’ schedules – perhaps spelling the end of the 9-to-5 routine and 40-hour workweeks. Our study shows that weekend work is spiking, with a 200% increase in team chats on Saturdays and Sundays.  


Such flexibility results in what we call a “globalization of work” where jobs are no longer geographically bound. It means people no longer travel for work, but work relocates for people – with employers having access to a wider pool of talent from all over the world.


This new world of work requires new factors for success: Agility and resilience are considered more critical traits, with skills emerging as the new compensation currency. 

The great rewards review

Faced with this new way of working, there is a need to rethink how employees are rewarded – with a greater focus on skills that drives employee as well as business growth.


One approach is to prioritize rewards for skills that are scarce, in-demand and bring the most business value. For example, there could be a base pay premium of up to 20% for employees with skills in emerging technologies such as machine learning.


Such pay premiums could encourage employees to upskill for the future, as rewards do motivate behaviour. Over time, the focus on skills-based reward and how the employee impacts business performance should be the key decision for compensation design.


This requires a more holistic, data-driven approach towards compensation, which our AI-powered solutions offer. Mercer Skills Library is a market-derived skills taxonomy, while Skills Pricer produces market data insights on skills and Skills Pay Planner recommends salary based on skill scarcity and business criticality. 

The not-so-great pay rise in Thailand

As companies review their rewards strategy, they also have to grapple with the prolonged pandemic that has taken a toll on salary adjustments. The average all-in-industry merit increase in Thailand is projected to be 4% for 2021 – a decrease from 4.3% in 2020.  


It is, however, likely to rebound to 4.5% in 2022 as growth recovers, led by the life sciences and related high-tech industries.


Across the different industries in Thailand, there is a disparity in compensation, with related high-tech industries expected to pay 32% more in base salaries compared to average wages while some labour-intensive industries such automotive industry pay less than average benchmark.


One way to make sense of salary trends is through Mercer’s Pay Band Tool, which compares your company’s data against the market to design salary bands. For smaller enterprises, Mercer’s Total Remuneration Survey (TRS) Lite provides market data to assist with compensation planning.


Such tools allow companies to take a longer-term view on reward packages that will fit the new world of flexible work, even as cost pressures mount


Yet, one thing remains constant: Skills should drive the transformation of talent and reward structures as companies seek to thrive in the future of work. 


Contact Mercer to find out how we can help you tailor a pay-for-skill rewards system to secure your company’s future. 

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