- Salaries in Singapore are forecast to rise to 3.0% in 2021 – up from 2.5% this year
- After factoring in inflation, the average real salary increase in Singapore will be 2.7% – one of the highest in the world
- The number of Singapore-based companies implementing pay freezes is also expected to drop in 2021, down to 22% from 36% this year
- Most locations in Asia Pacific are forecasting higher rates of increase in 2021
- Rates of real salary increases across Asia Pacific are forecast to be 1.7% in 2021
Salary increases for workers in Singapore are forecast to rise to 3.0% in 2021, up from 2.5% in 2020.
Upon factoring in the predicted inflation rate of 0.3% for next year, workers in Singapore will see an average salary increase of 2.7% in real terms. While down slightly from a 2.9% real salary increase they saw this year, it is one of the highest in the world.
“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,” said Lee Quane, Regional Director – Asia at ECA International. “Singapore has experienced consistently low inflation in recent years, with the country seeing a deflation of -0.4% in 2019, and is expected to see an inflation level of just 0.3% in 2021. This will thus result in higher real salary increases for workers in Singapore, as compared to countries with higher inflation rates in Asia Pacific such as Hong Kong.”
Quane continued, “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.”
ECA International is the world’s leading provider of information, software and expertise for the management and assignment of employees around the world. The annual Salary Trends Report analyses current and projected salary increases for local employees in 68 countries across the world.
Asia Highlights
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 said, “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.”
Indonesia leads the way in this year’s Asia Pacific ranking for real salary increases with a forecast increase of 3.8% – significantly higher than the joint second-place nations of Singapore and Thailand, where the increase is expected to be 2.7% in comparison.
“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. 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. In fact, our data shows that although 42% of the companies surveyed in Indonesia implemented a salary freeze this year, only 24% of these will do so in 2021 – contributing to the rise in average salary increases in the country,” said Quane.
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% 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.”
Additionally, real salary increases, which reflect increases in employee incomes after taking into consideration inflation rates, will be relatively low in Hong Kong in 2021 – coming in at 0.6% after taking the forecast inflation of 2.4% for 2021 into consideration.
“Real salaries for Hong Kong residents will be amongst the lowest in the region. This compares unfavourably with expected rates of real salary increases across other parts of Asia Pacific, and may hinder the extent to which the Hong Kong economy may recover from the current recession,” added 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% 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.”
Global Highlights
Outside of Asia Pacific, the outlook is presented very differently as many countries are expected to see decreases to real salaries. This includes major economies such as the United States and Saudi Arabia.
Quane said, “As the world struggles with the social and financial effects of the global pandemic, many countries continue to feel the impact on their economies, and therefore, their salaries. Although many Asia Pacific countries are already seeing signs of recovery, companies based in other parts of the world such as the United States and Middle Eastern countries are approaching salary rises more conservatively. As such, when inflation returns to normal levels next year as we expect, workers based in these countries are not expected to see above-inflation salary increases.”
Argentina is once again at the bottom of the rankings, with a forecast real salary decrease of -28.6%. This is because inflation is expected to stay at an alarmingly high level in 2021, reaching a whopping 43.0%.
Top ten forecast real salary increases – Asia Pacific
|
Country
|
2021 forecast real salary increase (%)
|
2020 real salary increase (%)
|
|
Indonesia
|
3.8
|
2.6
|
|
Thailand
|
2.7
|
4.1
|
|
Singapore
|
2.7
|
2.9
|
|
Republic of Korea
|
2.6
|
1.5
|
|
China
|
2.3
|
0.9
|
|
India
|
2.3
|
-0.1
|
|
Cambodia
|
2.1
|
2.1
|
|
Bangladesh
|
2.1
|
-3.6
|
|
Taiwan
|
2.0
|
3.1
|
|
Japan
|
1.7
|
2.1
|
-ENDS-
Notes to Editors
About ECA’s Salary Trends Survey
The information above was taken from ECA's Salary Trends Survey 2020/2021. The survey reports current-year salary increases for local national employees and the anticipated increases for reviews in the forthcoming year. It is based on information collected from over 370 multinational companies for 68 countries. Reports are available free to all participants or for purchase either as a set or individually per country for non-participants from the ECA website.
The forecast average real salary increase in a country is calculated by looking at the predicted average nominal salary percentage increase (i.e. the salary increase given to employees by their employers) and subtracting the forecast inflation. E.g. if the average nominal salary increase in a country is 4% and inflation is at 2.1%, this would result in an average real salary increase of 1.9% (4%-2.1%=1.9%).
Data is based on increases including merit. Including merit is the total salary increase and represents general cost of living/inflationary increases plus performance/merit related increases. The data above was collected from August to September 2020.
The survey included data from all seniorities across the following industry groups which included Energy, mining & petrochemicals; Chemical & pharmaceutical; Transport & logistics; Manufacturing & consumer goods; Legal & professional services; Engineering & technology; Retail, leisure & other services; Financial services; Non-profit.
About ECA International
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