Low inflation boosted 2015 APAC salary increases

Singapore beats Hong Kong in real terms.

Salaries across Asia Pacific will rise 7% in 2015, according to the 2015 Asia Pacific Salary Budget Planning Report, released recently by leading global professional services company Towers Watson.

According to a release from Towers Watson, While this is in line with 2014, it represents a significant jump in real terms, owing to lower inflation in 17 of the 19 Asia Pacific economies examined in the survey.

In real terms, average salaries are set to rise 4.3% in 2015, compared to 3.3% last year. In East Asia, the highest increase is seen in mainland China (7.4%), while Hong Kong will see the smallest (1.3%).

In 2016, nominal salary increases across the region are projected to dip slightly to 6.7%. The survey looks at a range of industry sectors and job grades from factory shop floor to executive suite.

Here's more from Towers Watson:

“This is good news for employees, who are finally seeing the results of the post-financial crisis pick-up in economic growth and in receiving more cash in hand,” said Sambhav Rakyan, Data Services practice leader, Asia Pacific at Towers Watson.

Mr. Rakyan added that with the oil price bottoming out, the sharp fall seen last year will start to work its way out of the inflation calculation. Thereafter, it may go back up. “Companies may want to allow for such a recovery when budgeting for 2016, despite the current lower inflation rate,” he said.

Hong Kong and Singapore are both set for overall increases of 4.5% in 2015, unchanged from 2014. However, after inflation, Singaporean employees will see far more of that increase. In real terms, salaries will rise 1.3% and 4.4% respectively.

“The Singapore government has been sticking to a tight monetary policy to keep the lid on inflation. Its policy to stabilize property prices has also helped curb inflationary pressures,” said Mr. Rakyan. “In Hong Kong, at least employees will receive higher real increases than last year (0.1%) thanks to a modest fall in inflation.”

Salary increase budgets for 2016 in Hong Kong and Singapore are forecast to rise 4.6% and 4.5% respectively.

The study found that across all industries, almost 80% of respondents said they plan to allocate a larger portion of their budget to high performers. A similar trend is seen in the three core industries in the survey - financial services, technology and healthcare/pharmaceutical.