Employers in Asia Pacific rethink salary budgets for 2024-25
HONG KONG – After a period of high employee turnover and resignations, companies in Asia Pacific are expected to stabilise their headcount and cut back – if not maintain – salary budgets for 2024-25, findings from global advisory firm WTW revealed.
Talent in India, Singapore, the Philippines, Indonesia, Vietnam and Australia are seeing slimmer salary growth margins in 2024 compared to 2023. However, some markets are expected to bounce back to a slightly higher rate of increase by 2025.
Tighter salary budgets in APAC
Economic headwinds and other financial challenges are prompting employers to “revisit and revise their approach to their salary budget strategies,” analysts from WTW observed.
Overall, the rate of increase for salary budgets across APAC has fallen from 5.9% in 2023 to 5.7% in 2024. It is predicted to inch back up to 5.8% in 2025, WTW’s Salary Budget Planning Report showed.
In most cases, salary budget increase rates will slow down.
However, in the case of Malaysia (5.0%), Thailand (5.0%), South Korea (4.5%), Taiwan (4.0%), Hong Kong (4.0%) and Japan (3.0%), salary budgets are expected to plateau all the way through 2025.
It isn’t all gloom and doom in the regional economy. However, a more conservative outlook has become pervasive across most markets. This is despite APAC showing signs of recovery.
Read More: Pay hike and salary trends in APAC 2024
“Looking ahead, most markets anticipate higher GDP growth rates in 2024, fostering a positive economic outlook. As a result, organisations are expecting stable or increased salary increase rates next year,” said Edward Hsu, Rewards Data Intelligence Leader, International and Asia Pacific, WTW.
“However, we are also seeing variations across markets with shifting priorities by companies affecting salary budgets.”
The rate of increase, or decrease, in a company’s salary budget can serve as a barometer of talent market conditions.
Salary budget changes often indicate the outlook of employers as they determine how attractive their remuneration packages will be. In an employers’ market, for example, companies have the advantage of cutting back on the size of their salary offers or annual pay increases. In an employees’ market, workers can, to a certain extent, command the size of their pay.
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Salary growth in tech-savvy roles across APAC
Where better to see this push and pull of forces than in the rise of AI-centric jobs? The growing demand for tech-savvy talent has started to influence how certain roles are budgeted for – primarily due to the ongoing digital skills shortage.
“Digitalisation also has an effect on compensation, with tech roles such as those in AI, machine learning, seeing double-digit salary growth in many markets,” Hsu said.
“The transformation potential of AI has made it the most sought-after technology discipline in the global talent market. As such, organisations around the world are willing to invest heavily in skilled professionals who can drive innovation and growth in the AI space, giving companies the upper hand in today’s competitive business environment,” the expert said.
“As AI 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.”