Lower Salaries in Emerging ASEAN Economies Eroding China’s Competitiveness

Base salaries among emerging economies within the Association of South East Asian Nations (ASEAN) are substantially lower than those of mainland China, eroding China’s competitiveness, according to the findings of the Asia Pacific section of its 2015/2016 Global 50 Remuneration Planning Report conducted by Willis Towers Watson.


Labour costs in the Philippines, Vietnam, Malaysia, and Thailand are around half of China; and China’s base salaries across all job grades are between 5% and 44% higher than in Indonesia, which is the most expensive labour market among the emerging ASEAN economies (emerging ASEAN excludes Singapore as the market is regarded as a developed economy).


Taiwan lags on senior and top management pay. At these levels, Taiwan’s pay levels are not only lower than mainland China and Hong Kong, but also lower than Indonesia. Its pay levels are similar to those of Thailand.


Singapore base salaries remain far higher than in Greater China. Base salaries in Singapore are approximately 3%-10% higher than those of Hong Kong, which is the highest paying economy in Greater China.


Hong Kong vs Singapore


Hong Kong is the highest paying economy in Greater China, but it still lags behind Singapore.  Throughout the job grades from professional level to top management, the pay levels in Singapore are approximately 3%-10% higher than those of Hong Kong. But, compared with a year ago, the differential has narrowed for all job levels.


Hong Kong vs China


Hong Kong companies are generally higher payers than Mainland Chinese companies across all job levels. The largest differential is at the professional level where Hong Kong base salaries are more than double those of the Mainland, a gap that narrows to approximately 1.5 times entering the middle management level. At higher employee grades, the gap between the two locations shrinks significantly.


At the senior and top management levels, Hong Kong salaries are 23%-31% higher than in Mainland China. In addition to higher salaries, Hong Kong employees also tend to receive higher performance incentives than Mainland Chinese employees, creating further differentiation between Hong Kong and Mainland China pay levels.


Compared to a year ago, the pay differentials between Hong Kong and Mainland China widened by around 1.5%-3.2% through all the job levels with the only exception being at top management levels, where Hong Kong salaries are 31% higher than in Mainland China, down from 39% a year ago.

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