Employees in Hong Kong are forecast to receive salary increases of 4.5% in 2012, according to the latest Salary Trends Survey by ECA International, the world's leader in international assignee management. However, although the forecast increases are better than this year's figure of 3.8%, inflation will continue to offset the impact of the increase in real terms.

"With the annual rate of inflation in Hong Kong also predicted to be 4.5% for 2012, any effect on the purchasing power of Hong Kong employees is likely to be wiped out – in real terms, wages here will stay flat," said Lee Quane, Regional Director for ECA International, Asia. "On the plus side, this is better than the real wage decrease of 1.7% that we saw this year."

This contrasts with the situation in China, where companies are forecasting 8.5% increases, up from this year's 8%, and last year's 6.5%. With inflation currently forecast to be 3.3% next year, employees in China are set to experience real wage increases of 5.2% in 2012 – the largest in the region.

"China's position as the fastest-growing major economy in the world, combined with the difficulty of finding employees with the right skills means that companies there have to pay higher salaries to those they are able to find," said Quane. "While employees in China receive lower salaries than their Hong Kong counterparts, their salary increases in recent years has caused the gap to narrow, and the data from our survey suggests that is likely to continue to narrow."

ECA's Salary Trends Survey, which is conducted annually, monitors actual salary increases for 2011 and predicted salary increases for 2012 in 60 countries. It is used by international companies to monitor and benchmark company salary increases in markets around the world.

Impact of inflation – Asia Pacific region

In the Asia Pacific region as whole, salaries rose by an average 5.9% in 2011 and are anticipated to rise 6.3% next year.

The region's developing economies continue to see the highest increases in the region, where salaries are under pressure to keep pace with inflation and attract the talent that their rapidly growing economies require. Companies in India and Vietnam are both forecasting salary increases of 12% next year, followed by Indonesia (9.6%). China's figure of 8.5% puts it fourth in the list.

Employees in Japan are again set to see the lowest increases in the region. Companies there are predicting 2.3% increases in 2012.

However, once inflation is taken into account, a different picture emerges. Despite seeing the lowest actual salary increases in the region, deflation in Japan means that in real terms (i.e. the difference between actual salary increases and inflation), employees' salaries will increase by 2.8% next year – higher than the regional average increase of 2.1%.

"Real salary increments in Japan have been consistently high," said Quane. "This has helped to maintain the high purchasing power of staff there relative to other Asian markets."

Conversely, in Vietnam the impact of a 12% salary increase will be counteracted by inflation, which is forecast to be 12.1% in 2012. In real terms, Vietnam sits at the bottom of the regional table, with Hong Kong just above it.

Like their counterparts in Hong Kong, employees in Singapore are anticipated to receive an average wage increase of 4.5% in 2012, up from this year's 4.1% but still lower than the regional average. However, unlike Hong Kong, annual inflation levels in Singapore are forecast to be lower than the salary increases. This means that employees there are expected to see an increase of 1.6% in real terms.

"Clearly, there is a lot of uncertainty in the short-term," added Quane. "Even developing nations that have maintained consistently high growth rates are growing uneasy at the prospect of a renewed global economic slowdown. Nevertheless, companies throughout the region are forecasting slightly higher wage increases in 2012 than this year. If inflation in the region falls from this year's 5.4% figure to 4.2% in 2012 as forecast, many employees in the region will feel better off."

Global highlights

Globally, nominal salary increases are expected to rise slightly from this year's 5.3% average to approximately 5.6%.  While salary increases continue to rise globally, inflation is forecast to fall so real wage increases are anticipated to rise from an average of 0.7% to 1.8%.

Latin America is tipped to see the highest salary increases in 2012. Companies in Venezuela are anticipating 30% increases while employees in Argentina can expect 20% increments. Although inflation will bring real wage increases down to 5.7% and 8.2% respectively in these countries, these are still the highest in the survey, just ahead of China. Real wage increases of 3.6% on average in Latin America mean that it is also the region with the highest increases in real terms.

Apart from Japan, the countries where salary increases are anticipated to be the lowest next year are in Europe. Like their counterparts in Japan, employees in the Irish Republic are set to receive 2.3% increases. Ireland is followed by Switzerland and Portugal. On average, salaries are set to increase by 2.9% in Western Europe and by 4.9% in Eastern Europe.

Companies in both the United States and Canada are once again forecasting 3% salary increases for their employees next year.

In the Middle East, 5.9% salary increases have been forecast by the companies surveyed in Saudi Arabia. The figure stands at 5% for companies based in the UAE.

(Nominal salary increase forecasts: Asia Pacific

Asia Pacific rank 2012	Country	Global  rank 2012
1	India	3
1	Vietnam	3
3	Indonesia	7
4	China	8
5	Philippines	12
6	Thailand	16
7	Malaysia	17
8	Korea Republic	18
9	Hong Kong	26
9	Singapore	26
11	Australia	30
11	Taiwan	30
13	New Zealand	37
14	Japan	56

Real salary increase forecasts: Asia Pacific

Asia pacific rank 2012	Country	Global rank 2012
1	China	3
2	India	4
3	Indonesia	6
4	Malaysia	7
5	Philippines	8
6	Japan	9
7	Taiwan	15
8	Korea Republic	24
9	Singapore	28
10	Thailand	32
11	Australia	47
12	New Zealand	48
13	Hong Kong	55
14	Vietnam	56

* Note:

[1]. 'Real' wage refers to wages that have been adjusted for inflation. Forecast inflation rates are based on information from the International Monetary Fund

2. All salary percentage increases in the article are nominal (i.e. not adjusted for inflation) unless otherwise stated

ECA's Salary Trends 2011/2012 Webinar

ECA will be running a webinar focusing on the results of the Salary Trends 2011/2012 Survey on Wednesday 16 November 4pm.

For further information please contact: Lee.Quane@eca-international.com

ENDS

About ECA (www.eca-international.com)

ECA is the world's leader in the development and provision of solutions for the management and assignment of employees around the world.

Delivering data, expertise, systems and support in formats which suit its clients, ECA's offer includes a complete 'out-source' package of calculations, advice and services for companies with little international assignment management experience or resource; subscriptions to comprehensive online information and software systems for companies with larger requirements; and custom policy and system development projects for companies who manage thousands of international assignees around the world.

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About ECA Salary Trends Survey

The information above was taken from ECA's Salary Trends Survey 2011/2012. The survey reports current-year salary increases for local national employees and the anticipated increases for reviews in the forthcoming year. It is based on information collected from 273 multinational companies for 60 countries. In Hong Kong, 99 companies were surveyed. Reports are available free to all participants or for purchase either as a set or individually per country for non-participants from ECA's online shop. Information regarding ECA surveys can be found on the website.

Data is based on increases including merit. Including merit is the total salary increase and represents general cost of living/inflationary increases plus performance/merit related increases. The data above was collected in August to October 2011. The following industry groups were included Petrochemicals & mining; Chemical & pharmaceutical; Transport & logistics; Manufacturing & consumer goods; Legal & professional services; Engineering & technology; Retail, leisure & other services; Banking & insurance; Non-Profit.

For more information, please contact:

EBA Communications Ltd

Adam Barty / Raymond Woo

Tel: +852 2537 8022

adam.barty@ebacomms.com / raymond.woo@ebacomms.com

Lee Quane

ECA International

Regional Director - Asia

Tel: +852 2121 2388

Mobile: +852 9330 2570

Email: lee.quane@eca-international.com