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Salary increases in Singapore on the rise again, according to ECA International

05 Nov 2009

Companies in Asia showing signs of confidence about the future as salary increases for 2010 are higher than 2009

Employees in Singapore can expect salary increases of 3% in 2010, up from this year’s 2% average, according to ECA International’s latest Salary Trends Survey. Within the region, salary increase forecasts remain highest in the growth areas of China, India, Indonesia and Vietnam. Pay increases will be lowest in Japan.
ECA's Salary Trends Survey, which is conducted annually, monitors actual salary increases for 2009 and predicted salary increases for 2010 and is used by international companies to monitor and benchmark company salary levels in local markets around the world.
The survey found that salary increases within the region are predicted to average at 5% in 2010, almost twice as high as this year’s actual 2.8% average, and significantly higher than the average 2010 forecasts for Western Europe (2.6%) and North America (2.8%).
"While these averages are lower than the highs of 2008, these forecasts are an indicator that companies operating within the region are much more confident about economic conditions than a year ago", says Lee Quane, ECA International’s Regional Director for Asia. "Asia has weathered the economic crisis better than many regions, defying predictions, and these increases suggest that many employers are actively making up for the fact that employees in 2009 typically experienced little or no uplift in their salary."
Results from the survey indicate that like their Singapore counterparts, employees in Hong Kong and Taiwan can also expect salary increases of 3% in 2010, compared with this year’s actual 1% and 0.5% increases respectively. Chinese employees are likely to see their salary increases rise from 3% to 6% at the next pay review.
"Singapore’s increases, like Hong Kong and Taiwan’s, are lower than the regional average, however this is due to the fact that these are developed economies with low inflation rates," explains Quane. "Rises here are in line with similar developed economies elsewhere in the world such as North America and Europe.
"Salary increases in developing Asia will continue to be much higher than in locations like Singapore and Hong Kong in order to ensure that salaries keep apace with inflation. This is also a reflection of the demands of rapidly growing markets and the fierce war for talent in such locations."  
The largest salary increases within the region are forecast for Vietnam (10%), India (9.3%) and Indonesia (8.5%) – continuing a trend that persisted even during the economic turbulence of the last 12 months.
Employees in Japan are predicted to receive 2% salary increases – the lowest in the region. Whilst employees in Australia and New Zealand can expect to see an increase on the 2% awarded this year with companies there forecasting 3.5% and 3% rises respectively for 2010.

Salary freezes thaw

2009 saw salary increases scaled back considerably from initial forecasts. Furthermore, in most Asian countries at least a third of companies opted to freeze salaries, according to the survey. This included robust locations, such as China, where 35% of companies decided against awarding pay increases in 2009. Within the region Japan-based companies had the highest percentage of salary freezes (53%), followed by Taiwan (47%) and Hong Kong (45%).
"Salary freezes were a common response to the economic crisis in most countries around the world," adds Quane. "The high rates that we saw in Asian locations such as Japan were also seen in countries including the Irish Republic, USA, Mexico, Saudi Arabia and Germany, underlining the global impact of the economic situation.  The fact that now only 15% of Japanese companies are forecasting further freezes, and that this figure is the highest rate in the region, reflects a growing optimism regarding next year."
In Singapore, 11% of participant companies are proposing salary freezes for 2010, down from this year’s actual figure of 39%. In China and Hong Kong these figures stand at 12% and 14% respectively.

Impact of inflation

Despite Vietnamese staff getting the largest actual rises in 2010, inflation within the country is so high that they will fare the worst in the region in terms of real wage increases (-1%) i.e. the difference between actual salary increases and inflation. Conversely, deflation in Japan means that while employees there have the lowest actual salary increases in the region (2%), they are set to receive the region’s third highest real wage increase (2.8%) along with Malaysia, and second only to China (5.4%). Real wages in Hong Kong, Singapore and Taiwan will rise by 2.5%, 1.4% and 1.5% respectively.
"Headline figures can often be deceiving, as Vietnam proves,2 states Quane. "Despite high salary increases there, these have not exceeded inflation levels in the past two years. Forecasts suggest this trend will continue so that the real wages – the true measure of a person’s wealth – of employees in Vietnam will continue to decline next year."

Global view

Worldwide, salary increases are expected to rise from this year’s 3.1% average to around 4.8% - reflecting the pattern in Asia.
The highest salary increases in the survey can be expected by employees in Venezuela, according to forecasts which predict a 28% rise, up from this year’s 18% average. They are followed by staff in Argentina where companies are predicting 11% increments.
Continuing high inflation levels in Venezuela have contributed to the high salary increases. The real wage increase for staff in Venezuela is actually the lowest in the survey (-1.7%) followed by Vietnam (-1) and Saudi Arabia (-0.4).
Employees in Japan, Portugal and Finland are all forecast to receive the survey’s lowest salary increases (2%) in 2010.
The only countries where companies are forecasting salary increases for next year lower than this year’s levels are Chile, Argentina, Belgium and Colombia.
Companies are predicting employees in the United States to receive salary increases of 3% in 2010 which would be twice as high as those awarded this year. In Canada, increases of 2.5% are anticipated next year - four times higher than 2009 figures.
Salary increases in Western Europe average around 2.6%, while those in Eastern Europe are just over 5%. Salary increases in Europe as a whole are up 50% from those awarded in 2009. Russia, Bulgaria and Romania will see the highest increases while employees in Finland, Portugal and the Netherlands are forecast to experience the smallest pay rises in the region.
Elsewhere, companies are forecasting 3.6% salary increases for employees in Saudi Arabia. In the UAE this figure stands at 4%.

Salary Increase Rankings by Country for Asia Pacific

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Korea Republic
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Notes to Editors:
ECA is the world’s leader in the development and provision of solutions for the management and assignment of employees around the world.
Delivering data, expertise, systems and support in formats which suit its clients, ECA’s offer includes a complete 'out-source' package of calculations, advice and services for companies with little international assignment management experience or resource; subscriptions to comprehensive online information and software systems for companies with larger requirements; and custom policy and system development projects for companies who manage thousands of international assignees around the world.
About ECA Salary Trends Survey
The information above was taken from ECA’s Salary Trends Survey 2009/2010. The survey reports current-year salary increases for local national employees and the anticipated increases for reviews in the forthcoming year. It is based on information collected from 297 multinational companies in over 50 countries and is available free to all participants or for purchase for non-participants from ECA’s online shop. Information regarding ECA surveys can be found on the website.
Data is based on increases including merit. Including merit is the total salary increase and represents general cost of living/inflationary increases plus performance/merit related increases.The data above was collected in August to October 2009, with comparisons made to ECA’s update survey in February 2009. 

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