WITH a predicted inflation rate of 0.3% in 2021, workers in Singapore will see an average salary increase of 2.7% in real terms.
According to ECA International (Asia) regional director Lee Quane, Singapore is expected to be the third highest in the global rankings for real salary increases on par with Thailand and Colombia, and second highest in the Asia Pacific on par with Thailand, despite the lower forecasted increase in 2021 compared to what workers saw this year.
“The expected rise in salaries next year is largely due to fewer companies implementing salary freezes, with only 22% of those surveyed saying they will continue to freeze salaries into 2021, as compared with 36% this year,” Quane said.
All locations in Asia Pacific saw lower rates of salary growth in 2020, with an average salary increase of 3.2%. However, companies anticipate a recovery in 2021, with the average salary increase in the region forecast to jump to 4.3%.
In terms of real salary increases, countries in the region once again dominate the top of the global rankings, with eight of the top ten highest real salary increases in the global rankings expected to be seen in Asia Pacific countries.
Quane also noted that the average real salary increase across Asia Pacific is forecast to be 1.7%, which is significantly higher than the global average of 0.5%.
However, the average level of inflation in the region is forecast at 2.4%, which is not far off the global average.
“The real driver for higher real salary increases in Asia Pacific can be attributed to the sustained increase in productivity in many Asian nations, thus resulting in higher salary increases for workers,” he said.
“Few countries are expected to see a significant rise in the level of real salary increases in 2021, but there are exceptions to this within the Asia Pacific region. One of these exceptions would be Indonesia, which stands out at the top of the list and sees the average real salary increase rise from 2.6% this year to 3.8% in 2021,” he explained.
“While inflation in Indonesia is expected to continue falling, repeating the trend we have seen in recent years, fewer companies in the country intend to freeze salaries – implying that the nominal salary increases would have risen.”
Meanwhile, workers in Hong Kong experienced a reduction in salary growth in 2020 as businesses were adversely impacted by an unfavourable economic situation – due to both the socio-political tensions in the city and the impact of the COVID-19 pandemic.
“Hong Kong’s expected rebound to 3.0% in 2021 shows that employers are cautiously optimistic about the prospects for recovery next year. However, the fact that these rates remain lower than 2019’s reveals that any recovery is likely to be gradual,” said Quane.
Workers in China will also see a recovery in the rates at which their salaries will grow in 2021. Workers can expect to receive a 5.0% salary increase on average next year – up from 3.8% in 2020.
Quane explained, “China’s economy seems to have weathered the impact of the COVID-19 pandemic better than many other locations in the region, and this is reflected in the extent to which salaries are forecast to grow again in 2021. Real salary growth rates in China will only be surpassed by four other countries in the region. Indeed, once inflation is factored in, the real incomes of workers in China will grow by 2.3% in 2021.” – Nov 19, 2020
