Rapid economic growth and widespread digital transformation in Asia Pacific calls for organisations to scrutinise key labour and market trends more closely to optimise their compensation strategies. In this article, we will discuss the market and employment developments occurring in Asia Pacific, and the importance of robust data to empower companies make informed decisions regarding talent attraction and retention. By comprehending these trends and adopting data-driven strategies, organisations can effectively attract and retain top talent, foster innovation and achieve long-term success.
Most regions are anticipating higher GDP growth rates this year. Asia Pacific is in the midst of robust economic growth and is expected to experience the highest growth with a projected GDP growth rate of 3.9%. It is expected that the inflation rate in Asia Pacific will decrease to 4.7%.
Meanwhile, salary budgets are anticipated to increase across the region, (see Figure 1). India is taking the lead, with a salary increase rate of 9.9% projected in 2024, followed by Indonesia at 6.8% and China at 5.8%. The salary increase rates are expected to be between 3% and 4.5% in majority of the markets in Asia Pacific, indicating that compensation is forecasted to outpace inflation rates in the region.
Moreover, there are also other specific market and labour developments occurring in each country, which merit a closer look to guide businesses in aligning their compensation and talent management strategies accordingly.
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The robust economic growth in the Philippines in 2023 has driven salary movement to 5.7%, with digital and accounting roles largely contributing to the increase. In India, salary increase rate is expected to reach 9.9% this year, driven by concerns over a tight labour market as the country is poised to become the third largest automobile market and the second largest manufacturer of mobile devices. Meanwhile, persistent inflationary pressures in Australia put salary increase rates at around 4% as employers aim to retain their current workforce, particularly for production and support roles.
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The demand for digital talent remains robust in Singapore as the fintech and digital payments industries continue to offer a 39% premium to attract key talent. Further, traditional manufacturing companies are beginning to upskill their existing workforce to integrate automation across their operations. In Hong Kong, salaries for roles in data science and business intelligence have surged by 8.3%, indicating strong demand for talent. Competition for talent has also been evident in the field of human resources, particularly for key roles in the environment, social and governance, employee wellbeing and productivity.
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Local regulations also have an impact for organisations’ decisions on their workforce, such as Japan’s “Shunto” system. This requires management and unions of major companies to negotiate on pay and working conditions of their employees. Rengo, the largest trade union group in the country, announced in mid-March that workers in major Japanese firms requested an annual salary increase of 5.85%. In Hong Kong, the government implemented several talent attraction policies to augment its labour force population following a four-year-decline in 2019. Meanwhile, the government in the Philippines is implementing policies encouraging international companies to invest in the country and expand their operations.
These developments call for organisations to consider some actions to align their compensation strategy with the market and maximise talent attraction and retention in their workforce.
Rapid shifts in the global and local economy, alongside geopolitical dynamics, exert extensive influence not just on an organisation’s business environment but also on how to structure compensation to foster talent attraction and retention. Inflation may have been easing in Asia Pacific, but it still plays a significant role in the salary budgets of employers in Australia. In burgeoning economies like the Philippines and India, having comprehensive business intelligence about the local market is increasingly crucial for employers. This helps ensure compensation packages are aligned with the prevailing business environment, facilitating the attraction of key talent essential for driving companies forward.
Embracing digital transformation is increasingly imperative to stay ahead of the competition. For example, traditional manufacturing companies in Singapore are preparing to integrate automation into their operations and are upskilling their workforce as a result. As artificial intelligence and other technologies become more prevalent, employers need to consider how they can leverage these for their business, and whether they ought to train their workforce for it or recruit digital talent to facilitate digital transformation.
To succeed in these endeavours, organisations stand to gain from accessing comprehensive data to inform decisions regarding compensation and attraction and retention of key talent. Localised data provides valuable insights on developments that are happening within local markets, thereby guiding their compensation decisions. Meanwhile, multidimensional data that provides information on skills currently in demand will help employers in building a competitive talent attraction and retention strategy tailored to the unique needs of their business.
