Korn Ferry has recently released a forecast that reveals that while 2020 salary increases across the globe are expected to grow at around the same rate as in 2019, a slowing trend in inflation will ultimately mean an increase in real-wage salary growth.
In Asia, salaries are forecast to grow by 5.3 percent in 2020. With an inflation rate of 2.2 percent, real-wage salaries are expected to be 3.1 percent, the highest growth rate compared to other regions.
In Singapore, real-wage salaries are estimated to increase by 3.6 percent, up from 3.0 percent last year. While the headline forecast for 2020 remains at 4 percent, similar to last year’s forecast, a benign inflation rate of 0.4 percent contributes to the higher real-wage increase.
China’s real-wage forecasted growth for 2020 weakened to 2.9 percent, down from 3.2 percent in 2019 and 4.2 percent in 2018. Japan saw a real-wage prediction of 0.6 percent, up from last year’s prediction of 0.1 percent. In the meantime, political uncertainty in Hong Kong and a relatively high inflation rate of 2.6 percent has translated to a modest real-wage growth forecast of 1.4 percent in 2020.
“With the ongoing situation in Hong Kong and geo-political uncertainly in other parts of Asia, International and MNCs might re-ignite conversations around choosing Singapore as the main location for ASEAN and APAC Head Offices. This will keep continuous pressure on wage increases for Singapore market, more than anticipated because of economic slowdown and US-China trade war. We see this pressure building up for the middle to senior level managers, more than junior and entry level graduates,” said Kartikey Singh, Head of Rewards & Benefits, Korn Ferry Singapore.
“Singapore remains an attractive destination for talent although there are still roles that are difficult to hire. Almost 38 percent of participating organisations in the 2019-20 annual Korn Ferry Salary & Benefits survey indicated that they are facing difficulty hiring engineering roles, followed by IT and sales roles respectively. As such, organisations should focus the 3.6 percent salary increase on critical roles and those that are difficult to recruit. In addition, they should also consider spending a higher portion of the training and development budget on building a pipeline for these roles,” said Farhan Mahmood, Client Director, Korn Ferry Digital, Singapore.
Higher Real-Wage Growth Globally
Salaries are predicted to grow at a rate of 4.9 percent globally in 2020. With a global inflation rate prediction of approximately 2.8 percent, that puts the real-wage salary increase prediction at 2.1 percent. In 2019, the salary growth rate was 5.1 percent. With global inflation at 4.1 percent, that meant 2019 real-wage salary increases across the globe were only 1.0 percent
“There is good news for workers in these numbers given real-wage growth is projected to be higher than 2019. But the lower rate of inflation embedded in the numbers may also foreshadow expectations of a stalling economy in several key countries, which could in turn lead to higher rates of unemployment,” says Don Lowman, Korn Ferry Global Leader, Rewards and Benefits.
The following is a table by Korn Ferry that shows predicted salary increases, as forecasted by global HR leaders, for 2020 in Asia and compares them to predictions made at this time last year regarding 2019. A more detailed infographic that covers the other regions can be found here.