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

30 November 2018

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.”Workers in Bangladesh and Thailand can expect significant wage hikes in 2019Other 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.

Mercer ranks Phnom Penh last among ASEAN cities for personal safety

21 March 2019

Cambodian capital Phnom Penh has been deemed the worst city in East and Southeast Asia for personal safety according to Mercer’s latest quality of living index.

Now in its 21st edition, the annual Quality of Living index compiled by human capital consultancy Mercer assesses a comprehensive range of factors in over 450 cities worldwide to arrive at its overall rankings – with Singapore the perennial top performer in Asia and the upper ranks largely dominated by cities in the DACH region: Germany, Austria, and Switzerland.

This year, however, Mercer has also provided a separate ranking specifically for personal safety. Overall, Luxembourg was considered the safest city in the world, while Phnom Penh was assessed as the worst of all East and Southeast Asian cities, finishing one spot below Yangon in 199th place worldwide. Singapore, again, was the highest placing city in the region, at 30th.

The poor personal safety ranking places Phnom Penh only marginally above the notoriously crime-ridden Port-au-Prince in Haiti – but while the US State Department has previously listed the crime status of Phnom Penh as critical, primarily due to bag-snatches and pick-pocketing – the Mercer assessments takes in a broader range of factors, including internal stability, law enforcement, personal freedom and freedom of the press.

“The security of the individual is informed by a wide range of factors and is constantly in flux, as the circumstances and conditions in cities and countries change year over year. These factors are crucial for multinationals to consider when sending employees abroad because they consider any concerns around the expat’s own safety and can have a significant impact on the cost of international compensation programmes,” said Mercer principal Slagin Parakatil.Mercer ranks Phnom Penh last among ASEAN cities for personal safetyDespite the concerns for personal safety, the expat population of Phnom Penh continues to boom – with unreliable government estimates of around 160,000 foreign workers in the country in total – and in the 2017 Expat Insider survey report conducted by expat platform InterNations, respondents rated Cambodia as 12th for personal happiness. Still, Phnom Penh ranked in lowly 196th on the overall quality of living index.

To compile the index, Mercer’s research considers 39 living dimensions in areas such as the political and social situation, economic landscape, public services, housing, consumer goods, education, healthcare, and natural environment – before weighting the scores according to expatriate priorities. Singapore, which has a population comprised of 40-plus percent expats, was as assessed as having the 25th highest quality of living worldwide.

Outside of Singapore, cities in Southeast Asian fared poorly on the index compared to their East Asian cousins, with Japan having five cities in the top 65 and Shanghai, Beijing, Guangzhou and Shenzhen of mainland China all outranking Bangkok (133), Manila (137), Jakarta (142) and Ho Chi Minh City – perhaps due in part to chronic congestion. The second best performing Southeast Asian city after Singapore was Kuala Lumpur in 85th.

As to personal safety ratings – described as the cornerstone of stability in any city, which businesses and talent require to thrive – the majority of Southeast Asian capitals were clustered toward the bottom of the list, including Jakarta, Vientiane, Manila and Bangkok all between 165th and 170th. Hanoi, however, was just outside the top 100, which was rounded out by Kuala Lumpur.

With many multinationals said to be reviewing their manufacturing and supply chains in the wake of the ongoing Chinese-US trade tensions, the in-depth Mercer survey can serve as an invaluable guide. “Companies looking to expand overseas have a host of considerations when identifying where best to locate staff and new offices,” said Ilya Bonic, President of Mercer’s Career practice. “The key is relevant, reliable data and standardised measurement, which are essential for employers to make critical decisions.”