Across-the-board pay rises are a thing of the past in the Asia Pacificregion. Ed Peters looks at how employers are now rewarding only the best staffEmployees in the Asia Pacific region hoping for a bumper pay rise or bonusin 2001 might do well to look for jobs elsewhere around the world. The hangoverfrom the economic crisis of the late 1990s continues to exercise its presencein the form of single-digit salary increases. With business still a way off from booming, Asia Pacific remains anemployers’ market. And now that the dot-com bubble has burped (rather thanburst), the previously voracious demand for high-tech, computer-related skills hasdecreased significantly. Hong Kong, one of the leading business players in the Asia Pacific region,is a sure indicator of what is going on elsewhere, from mainland China to theslower-developing countries such as Indonesia and the Philippines. According to the findings of the Pay Trend Survey 2000 conducted by the HongKong Institute of Human Resource Management (IHRM), the predicted increase for2001 in the Special Administrative Region is less than 3%, although thiscompares favourably to the overall increase of 0.8% in 2000. The survey covered some 114 companies, with a total workforce of about133,000. Roughly half promised a pay increase in 2001, one said there would bea definite freeze and the remainder were still considering their options.”Pay adjustments in 2000 picked up slightly from 1999,” said IHRMpresident P.O. Mak, noting that 73 companies (64%) gave an average pay rise of1.9% and the number of companies who froze their salaries dropped by half, to41. The overall average increase of all the companies surveyed in 2000 was0.8%, compared to 0.3% in 1999. The analysis by business sector showed that 50% or more of the companies inbanking, construction/property development, hotels, public utilities and theretail sectors froze salaries in 2000. “Workers in the insurance, trading and high-tech sectors got relativelyhigher salary increases last year, possibly because these businesses were lessaffected by the sluggish recovery of internal consumption,” Mak explained.However, the survey showed that even companies who gave pay rises, did notgive them to all staff. Nearly three-quarters of employees did not receive anincrease in 2000. Virtually no companies gave across-the-board pay rises. The survey also asked employers for their budgeted pay adjustments for 2001.”Initial indications were that about 50% of the companies in the surveyplan to give a positive salary increase in 2001,” said survey chairmanPatrick Maule. “Many companies have yet to decide on what to do, especially those whosereview dates fall in the second or third quarter of 2001.” Overall, the projections for 2001 are more upbeat, albeit still constrained.Unless – and until – the economy shows more reliable signs of full recoverythis constraint is likely to continue. “Our forecast is less than 3%, withseveral companies predicting less than 2%,” added Maule. The findings in Hong Kong were duplicated in other major industrial centresin Asia Pacific. Analysts agreed that in the coming year, companies are almostcertain to give pay rises only to the better performers, so many staff mayexperience another year of pay freeze. Non-contractual bonuses have also beenused more generally to reward the highest-performing staff. The economic downturn has illustrated the advantage of moving away from thetraditional practice of having a 100% contractually guaranteed salary package,as non-guaranteed bonuses provide the simplest method for flexing payroll costswith business fortunes. “In years gone by, staff simply expected to get a month’s bonus ormore,” said Connie Wang, HR director of Kuala Lumpar-based chemicalsconglomerate Phortone Ltd. “But now we and other corporations right acrossAsia are looking at rewarding just the best workers. This improves productivityfrom top to bottom and is a natural cost saver for the company too.” Wang said possibly the greatest long-term benefit of the economic downturnlay in the impact it had had on salary inflation, causing it to become morerealistic and more in line with regional competitors. Employers in Asia Pacificare starting to realise they should focus on their best performers and restrictthe limited salary budget increase to them, citing good management based onfair and objective measurement of performance as the best way of improvingeffectiveness and enhancing the quality of work. www.hkihrm.org Comments are closed. Rewarding performanceOn 1 Feb 2001 in Personnel Today Previous Article Next Article Related posts:No related photos.