Salaries in Vietnam to rise higher than Singapore's in 2011

While Singapore employees can expect a salary increase by 4% next year, a predicted 2.4% inflation rate will pull down the actual wage increase to just 1.6%.

The latest Salary Trends Survey by ECA International revealed that inflation will hurt Singapore’s salary increase rate and bring it below the regional wage increase percentage. Lee Quane, Regional Director for ECA International Asia said, “[Singapore’s increase next year] is lower than the anticipated regional real wage average of 2.4% and below the 2.9% real wage increases experienced by Singapore workers in the boom days of 2007.”

The largest increments in the region will continue to be experienced in Vietnam, according to the survey. Workers there can expect their salaries to rise by 11.8% in 2011 while those in India and Indonesia will receive 11% and 9.4% increases respectively. Chinese employees can look forward to seeing their salary increases rise from 6.5% to 7.5% at the next pay review.

The annual ECA Salary Trends Survey, , monitors actual salary increases for 2010 and predicted salary increases for 2011 in over 50 countries and is used by international companies to monitor and benchmark company salary levels in local markets around the world.

Asia Pacific region highlights

Within the Asia Pacific region, salaries rose by 5.2% on average in 2010 and are forecast to increase by 6% in 2011, according to the survey. This is more than 50% higher than the pay increases expected in Europe where they are forecast to rise by 3.5% on average.

“While salary increases will rise again next year, the pace will slow down from that witnessed between 2009 and 2010 when salary increases within the region almost doubled”, said Quane. “Nevertheless wage increases are continuing to head towards the highs of 2008 when the regional average stood at 6.9%.”

Results from the survey also indicate that, like their counterparts in Singapore, employees in Hong Kong should be prepared for salary increases lower than the regional average. Companies in Hong Kong forecast 3.5% increases in 2011, compared with this year’s 3% pay increases. Along with Hong Kong, companies in Taiwan and New Zealand are forecasting 3.5% rises. Survey results show that, as in Singapore, companies in Australia are predicting 4% salary increases.

“Salary increases in the region continue to be largest within developing Asia,” Quane said, adding, “This is partly to keep up with inflation and partly due to the demands of higher economic growth prompting widespread skills shortages in these locations.”

With salary increase predictions of 2.5% employees in Japan will again receive the lowest increases within the region in 2011.

Impact of inflation

Despite predicted to have the largest salary increases in the region, Vietnamese workers fare less well once inflation is taken into account. With 8% inflation forecast there next year, real wage increases i.e. the difference between actual salary increases and inflation will be a considerably lower 3.8%.

However, Asian workers are set to receive the highest real wage increases in the survey on average. Employees in China will receive the largest real wage increases not only within the region but globally. They will receive real wage increments of 4.8%. Workers in India and Indonesia will receive 4.3% and 3.9% in real terms respectively.

Despite having the lowest actual salary increases in the region, deflation in Japan means that workers are forecast to receive 2.8% increases in real terms next year.

Freezes

As last year’s forecasts suggested, the number of companies freezing salaries fell dramatically in 2010. Globally, approximately 13% of companies imposed salary freezes on average this year compared with over a third in 2009. This trend is set to continue in 2011 with just over 4% of companies imposing freezes globally.