Average 4.5% salary hike expected for Thai staffers for next two years: Mercer survey

The world's leading risk and people management consultancy released its annual Total Remuneration Survey (TRS) 2022 on Wednesday, which revealed that Thailand's projected salary increase was a median of 4.5%. Across all industries surveyed, no one predicted a decrease in salary increment.

According to the survey, the chemical, high tech, and life sciences sectors are expected to grow the most, by 4.9%, 4.8%, and 4.8%, respectively.

With the exception of the automotive and life insurance industries, forecast of increases in most industries have been the closest to pre-pandemic levels of 5% since the pandemic hit.

Their projected increases of 4.5% and 4% are still one point lower than their 2019 figures. Demand for automobile and life insurance is increasing, but it has not yet reached pre-pandemic levels.

Mella Daracan, Mercer’s Career Products Business Leader for Thailand, said that these salary increases are keeping up with inflation. When combined with Thailand's recent 5% increase in minimum wage, lower-wage workers may be able to alleviate some of their concerns about rising living costs.

"While this minimum wage increase may increase inflation due to more money changing hands and put additional pressure on businesses," Daracan noted, "Thailand's overall economic outlook remains favourable, compared to the last couple of years."

Furthermore, in terms of variable incentives, employees in Thailand can expect bonus payouts ranging from 1.3 to 2.5 months, with the life sciences industry providing the highest median payout of 2.4 months.
 

According to the survey, employers in Thailand are keeping the status quo on recruitment efforts. More than half (53%) of survey respondents stated that their headcount will remain unchanged in 2023. One-fifth of businesses (22%) plan to increase headcount, while only 4% plan to reduce headcount, down from 7% last year.

At the same time, voluntary attrition is expected to reach pre-pandemic levels of more than 10% in 2022, up from 9.4% last year. Consumer goods and life sciences are expected to have the highest turnover, as these industries are on the mend, with more business opportunities and job openings.

Overall, Thailand's projected salary increase is slightly higher than the Asia Pacific average (excluding India, as of November 3) of 4.4%. Overall median salary increases in Asia reflect a disparity in pay progression between emerging and developed economies, with estimates ranging from 7.1% in Vietnam to 2.2% in Japan, the region's lowest.

Juckchai Boonyawat, Mercer’s CEO for Thailand, said that as the Thai economy recovers from the pandemic, the country is naturally seeing an increase in voluntary attrition, as businesses re-hire and expand their talent pool to meet market demands.

He noted that there is fierce competition for skilled talent in the country right now.

"To attract talent, companies are offering higher wages and better benefits. Employees have also reported burnout and exhaustion in recent years and a desire for change," stated Jackchai.

However, he stated that competing solely on wages is unsustainable; hence, employers may want to focus more on their employees' value proposition in areas such as pay transparency, a clearer career path, and improved well-being through flexible work arrangements and wellness programmes.

He predicted that the next payment trend would be based on skilled base pay, which means that employees would be paid more or less depending on how many skills they have and whether or not the skills they have meet the needs of employers.

Employees must develop multiple skills, soft skills, and adaptability skills in addition to their technical and digital expertise, according to Juckchai.

Mercer conducted the survey between April and June of this year, sending a questionnaire to 636 organisations in Thailand across 15 industries. The branch of an international company makes up the majority (85%) of the organisations that participated in the survey.