Workers in Thailand and Bangladesh can expect healthy wage hikes in 2019

Salaries in Bangladesh are forecast to rise by one tenth in 2019 according to the latest projections from leading human capital consultancy Mercer, while Thai workers could take home an extra 5 percent next year.

A regional talent shortage is driving up wages across the Asia Pacific, with regional wages on average predicted to rise after inflation at a rate more than double that of the global figure. That’s the take-home message from the latest Compensation Planning forecast from the world’s largest human capital and employee services firm Mercer. The report is drawn from the firm’s annual compensation and benefits bench-marking study, which surveys hundreds of cross-sector employers in jurisdictions across Asia and around the world.

Despite a bulging global population, with an expected half a billion extra residents joining the world’s leading cities by 2035, and an increasing tilt toward Industry 4.0 technologies such as artificial intelligence and robotic process automation, a growing international skilled talent shortage has already reached a point where 38 percent of companies across the globe state that they struggling to access talent enough for their growth ambitions. For the Asia Pacific, that figure balloons to nearly a half of all companies.

As such, real salary increases, which is the expected total salary growth adjusted for inflation, are predicted in 2019 at 2.7 percent for the combined Asia Pacific region, compared to projected a global rise of just 1.2 percent. “Asia continues to see sustained demand for skilled talent, with digital skills continuing to draw a premium,” said Puneet Swani, Partner and Career Business Leader for the International Region at Mercer. “Companies are offering generous incentives and retention bonuses.”Other factors for the rapid rise in regional salaries according to Mercer include a continuing strong economy, low inflation and increasing productivity, while some companies are restructuring their remuneration packages to manage risk. “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 in order to contain excessive risk-taking,” Swani states.

As for projected rise in total wages, Bangladesh leads the pack with a forecast ten-point hike, followed by a 9.8 percent jump for employees in Vietnam and a rise 9.2 percent for those in India. Overall salary increases are also forecast across sectors in Thailand at a rate of 5 percent – with the country’s automotive industry workers to receive the highest increases – while Singapore and Hong Kong are projected at approximately 3.9 percent apiece – the former adjusted to 2.6% as a real wage growth figure thanks to higher inflation.

In terms of real wage growth, countries in Asia occupy nine of the top ten spots for the global outlook (with China ranking 4th), and 14 positions overall within the top 20 worldwide. Mercer Thailand CEO Ake Ayawongs commented on the local forecast; “The future of work poses great opportunities as well as risks for organisations in Thailand. Organisations that can adopt more agile workforce models and offer more personalised and flexible employee value propositions are likely to thrive. Those that cannot do so may struggle in the long run.”

Overall, says Swani, organisations in the region are already beginning to evolve to meet the needs of the modern workforce. “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 – programmes to deliver meaningful career experiences and flexible arrangements, as well as programmes to help manage the physical, financial and emotional well-being of their employees beyond base pay,” Swani concludes.

Related: Countries in Asia facing huge wage hikes due to coming talent shortage.