Survey indicates firms will pay more in 2024 as economy recovers

The findings show that the median merit salary increments are expected to increase to 5% in 2024, up from 4.8% in 2023, indicating that the majority of companies plan to set aside more budget to pay their employees in 2024.

Mercer Thailand president Juckchai Boonyawat said at a press conference that the new government’s stimulus policies, as well as the robust recovery of domestic demand and the tourism sector, provide a more positive economic landscape in Thailand for 2024.

“Continued growth will be gradual and stable,” he said, noting that the situation supports employers’ eagerness to pay higher wages especially for the most skilled workers.

According to Mercer’s survey, Thailand’s projected median salary increase of 5% in 2024 is slightly lower than the Asia average of 5.2%.

This reflects the region's varying pay progression between emerging and developed economies.

India, Vietnam, and Indonesia have the highest projected median salary increases in 2024, at 9.3%, 7%, and 6.5%, respectively, while Japan, Taiwan, and Hong Kong have the lowest, at 2.6, 3.8%, and 3.9%, respectively.

Other countries represented in the survey include the Philippines (5.7%), China (5.2%), Malaysia (5.1%), South Korea (4.4%), and Singapore (4.2%).

Despite being lower than the Asia-Pacific region’s median average, Juckchai explained that the figure is appropriate for Thailand's growth and inflation rates.

Meanwhile, merit salary increases are expected to rise across most industries, with the life sciences, high-tech and automotive industries seeing the highest increases in 2024.

With more electric vehicles on the market and increased competition among automotive companies, the industry is expanding, resulting in a greater demand for talent.

Most industries are also forecasting higher increases than in previous years, with the life insurance industry forecasting a 4% decrease from 4.2% in 2023.

Performance recognition is critical for industries such as high technology, life sciences, and consumer goods, as evidenced by variable bonus payouts.

The three industries also have the greatest disparities in pay between employees who met their performance targets and those who outperformed them.

Furthermore, the survey results revealed that the country’s voluntary attrition rate, or willingness to quit and change jobs, has been steadily increasing and is expected to reach 10% by 2023.

“With economic recovery underway in Thailand, companies are making investments to expand and seize new business opportunities. This has resulted in renewed demand for skilled talent. We have also observed that an ageing society has caused a leadership gap in firms, hence they see the need to embark on talent-buying strategies to address talent shortages,” Juckchai said.

He pointed out that higher pay, allowances, and bonuses may not be what current employees prioritise right now. As a human resource management adviser for many leading Thai companies, Juckchai observed that many young workers focus on job-related factors differently.

“Some are considering culture organisations, while others are concerned with companies’ images, benefits, incentives, flexible working hours, and social and environmental contributions," he explained.

It is thus the HR department’s responsibility to determine the appropriate value proposition for each employee. For example, if that employee wishes to advance within the company, the employer should consider long-term benefits such as a profit-sharing programme.

The survey found that Thailand’s unemployment rate stood at 1.2% in the first half of 2023, making it one of the lowest in Southeast Asia and even the world.

This demonstrates that employees here are actively seeking employment opportunities that will position them for future career advancement and higher pay.

Therefore, employers and HR leaders will need to be able to offer well-thought-out remuneration packages to attract and retain valuable talent, particularly in sectors requiring specialised skillsets such as high tech and life sciences.

Meanwhile, to prevent worker shortage as the country becomes an ageing society, he suggested companies adopt digital technologies and innovation such as artificial intelligence to improve their productivity and efficiency while reskilling and upskilling their current workers.

“At the end of the day, people are still needed to navigate AI,” he pointed out.

Mercer surveyed 617 organisations in seven industries in Thailand between April and June of this year. These firms employ over 359,000 people in Mercer’s life sciences, consumer goods, retail and wholesale, chemical, automotive, high technology, and manufacturing subsidiaries.

Mercer’s flagship annual compensation and benefits benchmarking study identifies current pay practises and benefits policies, as well as budget, hiring, and turnover trends for the coming year.

Furthermore, Mercer conducts regular pulse surveys throughout the year to stay abreast of the impact of the rapidly changing business environment, as well as compensation and workforce trends.