Startups, e-commerce, services and pharma firms will be top pay masters in 2020
India will lead the way for salary increase in APAC in 2020 with 9.1%, followed by China (6.3%), Philippines (5.8%), Malaysia (5.3%), Singapore (3.8%), Australia (3.1%) and Japan (2.4%), according to IMF & Aon’s 2020 Salary Increase Survey. The key reason for India’s highest salary, compared to other economies in the APAC region, is high inflation rate, recorded at 3.4% in 2019.
The 24th Annual Salary Increase Survey covers 1,000+ organizations, 20+ industries, 500+ manufacturing organizations and 500+ service organizations in APAC region. As per the survey, while startups/e-commerce, services and pharma companies will be the top payers in 2020, sectors like logistics, infra, auto and hospitality are expected to be paying the lowest average pay hike this appraisal season.
The key findings of the survey include:
The business outlook for 2020 is stabilizing/improving for 92% of organizations and declining for 8% of organizations. However, organizations projecting a decline are also looking at an 8.1% salary increase.
India will lead all other APAC countries in terms of salary increase in 2020. However, Indian corporates have settled on a high single digit salary increase (9.1%). This is the lowest from the last decade (11.7% in 2010). It was even higher in 2007 (15.1%). This is also reflected in the organization’s salary increase projection scale, where majority of organizations (42%) are projecting salary increase in the range of 8 to 10% while 39% of organizations are projecting double-digit increase (31% in the range of 10% to 12% and 8% more than 12%).
Another interesting finding, as per the salary increase study, reveals junior management receiving a higher salary increase compared to the senior management. This shows senior management moving away from the pack and gap widening across levels of management (senior-level, middle-level and junior-level) in 2020.
The salary range across various sectors, which covers broadly manufacturing and services varies from 7.6% to 10% (2.4%). In Manufacturing, Pharmaceuticals tops at 9.9% while Automotive/Vehicles is lowest at 8.3%. In Services, Startups/E-commerce tops at 10% while Transport/Logistics is lowest at 7.6%.
Pay at Risk
There is significant increase in Pay at Risk, with India average at 16.1% in 2019 as compared to 15.2% in 2018. Financial institutions have recorded the highest Pay at Risk, followed by metals, chemicals, consumer products, energy, Hi Tech/IT, Automotive, Pharma, Retail/Infra, Hospitality/Restaurants.
Across management levels, Senior Management records the highest Pay at Risk (23.4%), followed by Middle Management (17%) and Junior Management (11.4%).
As per the survey, marginal rise in attrition has been reported with the average being at 16.1% in 2019, as compared to 15.8% in 2018. The voluntary attrition in 2019 is 13.5% while the involuntary attrition in 2019 is 3.6%.
The salary increase is further attributed to more and more organizations (85%) using the ‘Bell Curve’ methodology to assess talent. Even, 35% of organizations who have moved to a ‘feedback focussed approach’ feel that ‘formal ratings’ improve performance. This, in turn, leads to salary rise.