Thailand, 29 November 2021 – Companies in Thailand are forecasting a median 5% increase in overall salaries for 2022 as the economy starts to reopen after a prolonged and severe COVID-19 outbreak. Excluding companies that have implemented wage freezes, this is a positive uptick from 4.5% in 2021, the lowest mark for Thailand in a decade, and highlights a return for salary increments to pre-pandemic levels of 5% in 2019.
This is according to the annual Total Remuneration Survey (TRS) 2021 by Mercer that polled 598 organizations across 15 industries in Thailand between April and June this year. The projected salary increments reflect cautious optimism for hopes of an economic recovery in Thailand with Gross Domestic Product (GDP) estimated to grow by 1.2%1this year and 3.5 to 4.5% in 2022. In comparison, Thailand’s median salary increment is slightly below the Asia Pacific average of 5.4%. Across Asia, the median salary increases reflect a divergence in pay progression between emerging and developed economies, with estimates as high as 9% in Pakistan to 2.3% in Japan, the lowest in the region.
Piratat Srisajalerdvaja, Mercer’s Career Products Business Leader for Thailand, said, “The rebound in salary increments and bonus payouts shows that companies are hopeful of what lies ahead in 2022. However, with a limited talent pool in Thailand, it also means that employers need to review and revise their compensation packages strategically, as they would face stiffer competition to attract and retain talent in a fast-changing business environment.”
Salary increases led by the Life Sciences sector
Across the industries surveyed, the Life Sciences industry is expected to see the biggest pick up in salary increment at 5%2in 2022, up a full percentage point from 4% in 2021, followed by Life Insurance (an increase of 0.9% to 4.5%) and Chemical (up 0.7% to 5%). In terms of variable bonuses, employers in Thailand have also increased the budget for bonus payout to 3.5 months for 2021, compared to 2.3 months in 2020, with the Life Sciences and Automotive industries seeing the highest increase.
Commenting on the industry salary trends, Mr. Piratat added, “The Life Sciences, Life Insurance and Chemical industries are typically more recession-proof. Industries that are dependent on consumer spending like Consumer Goods, as well as labor-intensive ones such as Manufacturing and Shared Services, are more likely to see smaller increments due to the emergence of real inflationary pressures and challenges in the country’s key export markets such as the United States and China.”
Greater workforce stability expected in 2022
In general, employers in Thailand are maintaining the status quo on recruitment efforts. Half of the survey’s respondents said that there will be no change to their headcount in 2022. One in five companies intends to add headcount whereas only 6% of employers indicated they will reduce their headcount, down from 11% this year. Both voluntary and involuntary attrition for the first half of 2021 also dipped to 4.8% and 2.1% respectively, below pre-pandemic levels.
Juckchai Boonyawat, Mercer’s CEO for Thailand said, “As the Thai economy continues to face headwinds, the downward trend for voluntary attrition, especially in the last two years, reflects the uncertainty and growing anxiety of employees when they consider switching jobs in this climate. The dip in involuntary attrition, however, shows positive signs of a rebound in 2022. With companies in a better position, few are looking to trim headcount to keep their businesses afloat. It’s a win-win for all parties involved. On one hand, more employees are staying in their jobs, and on the other hand, businesses are confident in their ability to retain talent as the economy recovers. For the longer term, employers should pay more attention to taking care of employees who stay on by enhancing their benefits to support workplace flexibility and implementing health and mental wellness programs.”
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