Staff in Singapore expected to get one of the highest salary increases in APAC in 2021

2021 brings good news to staff in Singapore. salary increases for employees in Singapore are forecast to rise 3.0% in 2021, up from 2.5% in 2020. 

According to ECA International's latest Salary Trends Report, upon factoring in the predicted inflation rate of 0.3% for 2021, staff in Singapore can expect an average salary increase of 2.7% in real terms.

Despite being slightly lower than the 2.9% real salary increase this year, it stands as one of the highest in the world. 

Lee Quane, Regional Director – Asia at ECA International, said: "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."

He added that 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.

Indonesia, Thailand, and Singapore take the lead in Asia Pacific for real salary increases

In Asia Pacific, Indonesia led the way in 2021's rankings for real salary increases, with a forecast increase of 3.8% - a significant jump from the joint second-place nations of Singapore and Thailand, where the increase is expected to be 2.7%.

Quane explained: “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."

Over in Hong Kong, while salary increases are expected to rebound to 3.0%, real salary increases are expected to be relatively low, coming in at 0.6% after taking the forecast inflation of 2.4% for 2021 into consideration. 

Quane explained: "Hong Kong’s expected rebound to 3.0% 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."

He added that real salaries for Hong Kong will be the lowest in the region, comparing unfavourably with expected rates of real salary increases across other parts of Asia Pacific. This may hinder the extent to which the Hong Kong economy may recover from the current recession.

Elsewhere in China, workers can expect to receive a 5.0% salary increase on average next year – up from 3.8% in 2020. However, after taking into account inflation, the real incomes of workers in China will grow by only 2.3% in 2021.

Top 10 forecast real salary increases – Asia Pacific

#1 Indonesia

• 2021 forecast real salary increase: 3.8%
• 2020 real salary increase: 2.6%

#2 Thailand

• 2021 forecast real salary increase: 2.7%
• 2020 real salary increase: 4.1%

#3 Singapore

• 2021 forecast real salary increase: 2.7%
• 2020 real salary increase: 2.9%

#4 Republic of Korea

• 2021 forecast real salary increase: 2.6%
• 2020 real salary increase: 1.5%

#5 China

• 2021 forecast real salary increase: 2.3%
• 2020 real salary increase: 0.9%

#6 India

• 2021 forecast real salary increase: 2.3%
• 2020 real salary increase: -0.1%

#7 Cambodia

• 2021 forecast real salary increase: 2.1%
• 2020 real salary increase: 2.1%

#8 Bangladesh

• 2021 forecast real salary increase: 2.1%
• 2020 real salary increase: -3.6%

#9 Taiwan

• 2021 forecast real salary increase: 2.0%
• 2020 real salary increase: 3.1%

#10 Japan

• 2021 forecast real salary increase: 1.7%
• 2020 real salary increase: 2.1%

Eight of the top 10 countries with the highest real salary increases globally are from APAC 

In terms of real salary increases, countries in the region once again dominate the top of the global rankings, with eight of the top 10 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."

Outside of Asia Pacific, many countries are expected to see decreases to real salaries, including 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."

Top 10

forecast real salary increases – global

#1 Indonesia

• 2021 forecast real salary increase: 3.8%
• 2020 real salary increase: 2.6%

#2 Israel

• 2021 forecast real salary increase: 2.8%
• 2020 real salary increase: 2.5%

#3 Thailand

• 2021 forecast real salary increase: 2.7%
• 2020 real salary increase: 4.1%

#4 Singapore

• 2021 forecast real salary increase: 2.7%
• 2020 real salary increase: 2.9%

#5 Colombia

• 2021 forecast real salary increase: 2.7%
• 2020 real salary increase: -0.2%

#6 Republic of Korea

• 2021 forecast real salary increase: 2.6%
• 2020 real salary increase: 1.5%

#7 China

• 2021 forecast real salary increase: 2.3%
• 2020 real salary increase: 0.9%

#8 India

• 2021 forecast real salary increase: 2.3%
• 2020 real salary increase: -0.1%

#9 Cambodia

• 2021 forecast real salary increase: 2.1%
• 2020 real salary increase: 2.1%

#10 Bangladesh

• 2021 forecast real salary increase: 2.1%
• 2020 real salary increase: -3.6%

Photo / 123RF

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