Digital Talent Scarcity is Changing APAC Salary Trends

If you are one of the highest-ranking executives in China, there is a high chance that your pay outranks those of the U.S. and the U.K. If you have specific IT skills and working in Asia Pacific, you can expect a fat retention bonus.

These are new trends that are emerging out of the Asia Pacific, as highlighted in the Total Remuneration Surveys by Mercer.

The highest real wage growth for 2019, calculated as the salary increase minus current country inflation, would be for employees in Bangladesh at 10 percent. India (9.2 percent) and Vietnam (9.8 percent) take second and third positions respectively.

Australia will only experience 2.6 percent and New Zealand 2.5 percent, while Japan will continue to experience the lowest real wage growth rate of 2 percent in 2019.

On the flip side, Australia, Japan and Korea figure highest in the region for pay parity, which Mercer calculates regarding annual total cash and sees the region having several "tiers".

In Australia, Japan and Korea – the highest tiers -- starting salaries begin at USD 30,000 per annum, and sharply rises with promotions to senior levels, often at USD 250–350,000. Starting salaries are much lower (usually just USD 5,000) in “low-cost manufacturing bases” but similarly increases significantly at top management levels.

New trends are also emerging. Highest-ranking executives in China can expect to out-earn their peers in the U.S. and the U.K. But if you add long-term incentives (LTIs) and European social security benefits, the earnings picture changes rapidly in favor of the Western countries.

The region is also experiencing a dire need for IT skills; retaining these talents is becoming a priority for many companies. Twenty-six percent of organizations in Asia reported a retention bonus provision for employees with specific digital skills. Meanwhile, regulators are putting pressure on HR teams to come with better executive pay packages that reduce risky behavior

"As the world's engine of growth, Asia continues to see sustained demand for skilled talent, with digital skills continuing to draw a premium. Companies are offering generous incentives and retention bonuses. We also find companies deleveraging pay in the wake of increased regulatory scrutiny of discretionary bonuses, reducing year-end pay-outs and increasing base pay to contain excessive risk-taking,” said Puneet Swani, partner and Career Business Leader for the International Region at Mercer.

Mercer’s study reveals that fight to get talent is also shaping the way HR departments create remuneration packages in Asia – a region where 48 percent of companies reported having difficulty filling-in vacant positions, compared with the 38 percent globally.

Employees in specialist sales and engineering roles, in addition to local language expertise, are paid a significant premium. The increase in premiums is creating a headache when managing replacement costs. In addition, new employees with the right skills also expect higher starting salaries while the pressure on the cost of operations and margins multiplies.   

These concerns are making HR departments take a more holistic approach to creating their company's rewards packages.

“Companies in Asia Pacific are taking a more holistic view of their total rewards philosophy and employers are increasingly focusing on the experiential components of rewards – programs to deliver meaningful career experiences and flexible arrangements, as well as programs to help manage the physical, financial and emotional well-being of their employees,” said Swani.