Low Salaries in India Continue to Enhance Cost Competitiveness with China

Annual base salaries in India are the lowest in the Asia Pacific (APAC) region and significantly lower than China, according to research by leading global advisory, broking and solutions company Willis Towers Watson.

China’s base salaries across all job grades are between 64% and 100% higher than in India. The finding supports India’s emerging reputation as being a cost-competitive labour market in the region.

The findings in the APAC section of Willis Towers Watson’s 2015/2016 Global 50 Remuneration Planning Report enable cross-country pay competitiveness comparisons across the region, by providing base salary information using a consistent framework for job levels. The report also sheds light on the impact of currency movements on base salaries in U.S. dollar terms.

Among lowest entry-level salaries 

At an APAC level, entry-level salaries for white-collar professionals are among the lowest in India and the Philippines at an average annual base salary of approximately US$11,000. Their peers in China receive almost twice as much.

The story at senior management levels is not much different. At approximately US$66,000, India offers the lowest average annual base salary across the region, which is almost half that of China.

“Labor costs are always a significant contributor to decisions around potential foreign investments,” says Sambhav Rakyan, Data Services Practice Leader, Asia Pacific at Willis Towers Watson.

Rakyan notes that a young and tech-savvy workforce and comparatively lower salaries, especially at the entry level, augur well for India’s quest to attract investments and emerge as a top manufacturing destination.

“These factors, combined with a focus on skilling, could give India an advantage in comparison to China, where an aging population and shrinking workforce mean salaries will remain higher.”

China salaries are notably higher across levels as compared to India – 81% higher at entry-level, 84% at mid-level, double at senior level and 64% at top management level.

“China is focusing more on R&D and higher-end value-added production, which requires advanced skill-sets. For that reason, along with proximity to other parts of the supply chain, although China is much more expensive, it’s more mature infrastructure and skilled workforce is likely to continue to attract companies particularly when compared with the emerging economies in the APAC region. But low-cost labour is no longer a major selling point for China,” adds Rakyan.

Singapore tops at top management levels

In terms of highest paying countries, Australia tops at entry and mid-management levels while Singapore tops at senior and top management levels.

“Singapore has always been a leading economy in the region. As it continues to enhance its competitiveness in the international arena, it wants to bring in top talent with knowledge of best practices from all over the world, so offering globally competitive salaries is an important part of that process,” said Rakyan.

In terms of Greater China, Hong Kong has long been a hub for international talent; its gap with Singapore narrows once Hong Kong’s more favorable tax rates are taken into account.

 

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