Countries in Asia will lead the way for salary increases in 2020, the new ECA International Salary Trends Survey 2019/2020 has revealed.
In fact, 13 out of the top 20 increases in real salaries have been observed in Asian countries, with these countries occupying the top five spots globally according to forecasted real salary increase for 2020:
#1 India: 5.4% (2019: 5.6%) #2 Vietnam: 5.1% (2019: 4.0%) #3 Indonesia: 4.6% (2019: 3.8%) #4 Cambodia: 4.2% (2019: 3.8%) #5 Thailand: 4.1% (2019: 3.9%)
Commenting on this, Lee Quane, Regional Director - Asia, ECA International, said the average real salary increase in the Asia Pacific region is forecasted to be 3.2%, significantly higher than the global average of 1.4% and nearly thrice the European average of 1.1%.
"This is a trend that we have seen for many years now due to low inflation and rising productivity in many Asian economies, resulting in the rapid growth of salaries compared to other regions."
Quane also added that the emerging economies of Thailand and Vietnam will see further increases as "the nominal salaries expected to be given by employers stay well ahead of the low levels of inflation that these countries will see in 2020."
"This has been a long-term trend for both countries, as productivity continues to grow and inflation is controlled," he added.
Singapore to expect a lower average real salary increase of 3.3%
While Singapore saw a 3.3% increase in the average real salary this year, the report forecasted a slight drop to 3.0% above inflation in 2020. This comes after factoring 1% for inflation despite a nominal increase of 4%.
That said, Quane stated that with the "notably low" inflation levels that Singapore has seen in the recent years, as well as a tight labour supply and talent restrictions due to immigration constraints, imply that salary increases in the country "will remain relatively high."
Big drop in real salary increases predicted in Malaysia next year
On the other hand, the report found that not all Asian countries will benefit from an above-average salary increase after inflation.
For instance, employees in Malaysia can expect to see a big drop in their real salary increases as compared to the years before, at 2.9% in 2020 versus 4% in 2019. The reason Quane cites for this is that despite a forecasted nominal salary increase of 5%, inflation in the country is expected to rise from 1% to 2.1%.
This, in turn, will reduce the rate at which salaries increase in real terms for employees in the country.
Due to this, Malaysia no longer ranks on the global and APAC top 10 for salary increases.