A large proportion of businesses - 42% - say they will give pay rises equal to the inflation rate while 19% say they will increase salaries to above the inflation rate despite most international economies heading in the opposite direction.
According to Grant Thornton's International Business Report (IBR), the number of businesses in emerging markets offering above inflation pay rises to their employees has dropped dramatically over the last 12 months.
The research suggested that emerging market businesses are taking steps to maintain a competitive advantage by lowering costs to draw investors.
However, Thailand was not following this global trend.
Tom Sorenson, Grant Thornton's consultant and partner, said the numbers seem remarkable given the levels of inflation which, based on figures published by the Bank of Thailand, are: 3.8% in 2011 and 3% in 2012, while there are predictions of 2.8% in 2013 and 2.6% in 2014.
"I know very few companies who get away with salary adjustments at or below these inflation numbers. Clearly, companies in Thailand appear not to be too worried about their global competitiveness in the same manner we see in China and other developing economies," he said.
IBR revealed that the proportion of companies in Brazil, Russia, India and China expected to give pay rises above the inflation rate fell to 11% in the fourth quarter of 2012, down 21% from the same period in 2011.
Similar falls have been observed in Latin America from 32% to 20%, and Asia Pacific, 20% to 12%.
However, more companies in the US, UK, France, Germany, Italy, Canada and Japan (the G7) and European countries have been offering above inflation pay rises, rising from 10% to 11% and 9% to 12% respectively.
Ed Nusbaum, CEO of Grant Thornton International, said that a rise in reshoring, most notably in US manufacturing, is evidence of the slow erosion of what has been one of the key competitive advantages emerging economies held over mature economies.
With wages going up by 10-20% a year over the past decade in places like China and India, salaries in the US have stayed broadly level, while the cost of outsourcing has risen fast, he said.
Mr Nausbaum added: "Wages have rocketed in emerging economies over recent years. In order to maintain profitability, businesses in these economies need to keep their costs down. A key way of doing this is by limiting salary increases."
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Article source: http://www.thethailandlinks.com/2013/02/14/companies-lift-salaries-to-or-above-inflation/
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