APAC 2021 salary forecast 

All APAC region locations saw lower salary growth rates in 2020, with an average salary increase of 3.2%. Companies anticipate a recovery in 2021, though, with the average salary increase in the region forecast to jump to 4.3%. In terms of real salary increases, Asian countries once again dominate the top of the rankings, with eight of the top ten highest real salary increases expected to be seen in Asian nations. These figures and research findings were provided by The Annual Salary Trends Report by ECA International.

Lee Quane, Regional Director, ECA International, Asia said, “The average real salary increase across the APAC region is forecasted to be 1.7% which is significantly higher than the global average of 0.5%. However, the average level of inflation in Asia is forecast at 2.4% which is not far off the global average, and the real driver for the higher real salary increases in the APAC region is the sustained increase in productivity in many Asian nations, resulting in higher salary increases for workers.”

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 the 3.8% of 2020. China’s economy seems to have weathered the impact of the COVID-19 better than other locations in the region; this is reflected in the projected growth in salaries in 2021. Salary growth rates in China will only be surpassed by five other countries in the region, including Bangladesh and Pakistan, which need to provide high salary growth rates to enable workers’ purchasing power to keep pace with relatively high inflation rates. Once inflation is factored in, workers’ real incomes in China will grow by just 2.3% in 2021. Salaries for most Macau employees did not increase in 2020, although they are expected to see some recovery degree in 2021. Companies froze salaries for their workers in Macau in 2020 at a higher rate than elsewhere in the region, which is likely because many employers in the hospitality and leisure industries have been significantly affected by border closures in response to the COVID-19.

Salaries in Singapore will grow at a faster pace in 2021 in comparison to 2020. Furthermore, once inflation is considered, Singapore-based employees are likely to see a growth in their real salaries of 2.7%, which will be amongst the highest in the world and the joint second highest in the APAC region. 

Quane said “Singapore is expected to be joint third highest in our global rankings for real salary increases, and joint second in the APAC region, even though the increase in 2021 is forecasted to be lower than workers saw in 2020. Singapore has experienced consistently low inflation in recent years, even seeing deflation of -0.4% last year, and next year is no different with an expected inflation level of just 0.3%. This will result in higher real salary increases for workers compared to countries with higher inflation such as Hong Kong.” The expected rise in salaries next year is primarily due to fewer companies implementing salary freezes, with less than a quarter of those surveyed saying that they will continue to freeze salaries into 2021, compared with the 36% of 2020.

Indonesia led the way in the 2020 APAC ranking list 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. Quane commented, “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 APAC region. Indonesia stands out at the top of the list and sees the average real salary increase rise from 2.6% in 2020 to 3.8% in 2021. Inflation in the country is expected to continue falling, repeating the trend we have seen in Indonesia in recent years. However, additionally, fewer companies intend to freeze salaries, so the nominal increases have therefore risen. Our data shows that although 42% of our surveyed companies 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.”

Outside of Asia, the outlook is quite different for many nations, including many which 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 economies have continued to feel the effects on their economies and therefore on salaries. Although many Asian nations are already seeing signs of recoveries, companies based in other parts of the world, such as the US and Middle Eastern countries are approaching salary more conservatively. 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 was once again at the bottom of the rankings with a forecasted real salary decrease of -28.6%, as inflation is expected to stay at an alarmingly high level in 2021, reaching an enormous 43.0%.

Top ten forecast real salary increases—Asia Pacific

Top ten forecast nominal salary increases—Asia Pacific