by TMR / graphic by MZUKRI MOHAMAD
MALAYSIA is expected to see the fastest rate of salary increase in 2022 versus 2021 as the economy normalises along with other South-East Asian countries.
According to the latest Salary Trends Report by ECA International, workers in Indonesia and Malaysia were among the most impacted by the Covid-19 pandemic and are expected to see some of the biggest jumps in rates of salary growth in Asia Pacific (APAC) in 2022 compared to 2021, as economies start to return to normality after the pandemic.
“If these countries are able to keep inflation under control in 2022, the improved economic outlook will mean that real salary increase rates for workers in these countries will be some of the highest in the region,” said ECA regional director for Asia Lee Quane.
ECA is the world’s leading provider of information, software and expertise for the management and assignment of employees around the world.
Its annual salary trends report analyses current and projected salary increases in more than 70 countries and cities across the world.
Although some regions, such as the Americas, Africa and the Middle East, have a higher nominal increase forecast, the APAC region is predicted to have much lower levels of inflation in 2022.
“This means that once inflation is taken into account, workers in APAC will see a much higher real salary increase than anywhere else in the world,” he explained.
Workers in Singapore will see a higher increase to their salaries in 2022, with expected average salary increases of 3.5%.
After factoring inflation, which looks set to remain around the same levels as this year at 1.5%, employees in Singapore will see a real salary increase of 2% on average — up from 1.2% this year.
Workers in Singapore are set to see a notably higher increase to their salaries than in previous years, with the predicted 3.5% rise up from 2.8% this year and 2.5% in 2020.
“Similarly, we are forecasting that only 6% of companies based in Singapore will implement a pay freeze in 2022, significantly down from the 22% that put in a pay freeze this year. This all points to a much-improved outlook for workers in Singapore as the economy gradually recovers from Covid related restrictions and uncertainty,” he said.
Workers in China are predicted to see the second biggest salary increase in the region next year in real terms at 4%, only surpassed by Vietnam.
“At this point in time, workers in China are expected to see the second largest real salary increase in APAC in 2022. However, there are several threats to this which include the extent to which China’s zero-Covid policy may impact economic growth as well as the potential for inflation rates to surpass forecasted levels in 2022,” she added.
Workers in Hong Kong will see their salaries increase at a faster rate in 2022 than in 2021, although not as fast as many other Asian nations.
Salaries are set to rise by 3.2% on average in 2022 and after factoring in the 2.1% inflation forecast for next year, which means workers in Hong Kong will be left seeing a real salary increase of 1.1% — almost double the real salary increase of 0.6% that was seen this year.
Taiwan will see a slight jump in the forecast average salary increase — up to 3.5% in 2022 compared to 3.2% this year and in real terms, an increase of 2% compared to 1.6% this year.
Taiwan managed to escape many of the worst economic effects caused by the Covid-19 pandemic due to its early success in mitigating the effects of the virus overall, the ECA report stated.
Therefore, although the rise in salary increases of 0.3% is fairly small, this is due to the fact that companies in Taiwan managed to keep a fairly stable level of salary increases over the past few years.
“Taiwan has rebounded more broadly than some of its neighbours with only 9% of workers seeing a salary freeze this year compared to 22% in Singapore and 18% in Hong Kong,” he said.
Outside of Asia, the outlook looks set to be much more mixed as the average salary increase globally is predicted to be 4.6% but however, when factoring in the higher levels of inflation elsewhere in the world, the real salary increase worldwide will be just 0.9%.
Despite many Asian nations expecting to see improved consumer buying power with real salaries increases both this year and next, the same unfortunately cannot be said for every country as supply chain issues and rising gas prices have fuelled inflation while the effects of the pandemic continue to take their toll on salary increases for many, the report noted.
This trend looks set to continue for workers in many locations who will see decreases to their salaries in real terms next year, as inflation outstrips any nominal increase.
“This is even the case for a major economy such as the US where workers will see a 0.5% decrease in real terms,” he said.
Argentina is once again at the bottom of the rankings with a forecast real salary decrease of 10% in 2022, despite the fact that inflation there is predicted to halve to 25% from 51.4% this year.