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Employers here plan big hikes in their salary budgets

Employees at the KBZ Bank in Yangon, Myanmar.
Taylor Weidman - Getty Images
Employees at the KBZ Bank in Yangon, Myanmar.

For a big pay rise next year, the best place to live in Asia Pacific (APAC) may be an emerging market. If you're an IT worker, even better.

A survey released Tuesday by professional services firm Towers Watson found that South Asian countries will enjoy the biggest average salary budget increases in the APAC region next year.

Employers in Pakistan, Bangladesh and India are projected to increase wage allowances by 12, 11.2 percent and 10.8 percent respectively, the survey found. That's well above the Asia Pacific average of 6.8 percent.

Vietnam ranked fourth at 10.4 percent, followed by Indonesia's 9.4 percent. Among the region's developed economies, Hong Kong and Singapore are expected to see a 4.5 and 4.4 percent spike respectively, while Japan is at the bottom of the scale at 2.4 percent.

Of the sectors surveyed, technology will see the biggest budget hike next year at 6.5 percent on average, compared to 6 percent for financial services, and 5.8 percent for pharmaceutical.

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But don't celebrate just yet.

Taking inflation into account, actual wage increases are much leaner.

More of workers' paychecks may be eaten up amid growing price pressure next year, indicating employers are likely to be more focused on individual performance than inflation and the economic environment when awarding increases, according to Towers Watson.

Looking at real wage growth for 2016, i.e. adjusted for inflation projections, Myanmar topped the list with a 6.8 percent increase, followed by India at 6.1 percent, and 5.9 percent for Pakistan.

Brunei ranked the lowest with a 0.2 percent expected gain, while Japan, Singapore and Taiwan were each expected to see real wages grow by 1.5 percent.

On average, Asia-Pacific's average real wage growth comes in at 3.4 percent next year, exactly half of the projected pre-inflation rate and slowing drastically from 2015's 4.3 percent real increase.

"Facing the challenge of rising inflation and cost, employers are taking a more strategic approach to retaining talent such as by offering an employee value proposition that's more creative and flexible - for example, benefits options to which employees can more readily relate and appreciate," noted Sambhav Rakyan, data services practice leader for APAC at Towers Watson.

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The survey results were based on an average inflation growth rate of 3.4 percent in 2016, versus 2.5 percent in 2015.

Towers Watson isn't alone in betting on higher prices next year; the Asian Development Bank sees 2016 inflation in developing Asia coming in at 3 percent, compared to 2.3 percent this year.

The forecasts come amid current subdued price growth across many Asia-Pacific nations, including China, Japan, Singapore, South Korea, Sri Lanka, Vietnam, Thailand and the Philippines, illustrating concerns of spreading deflation.

But as much of Asia continues to experience severe exchange rate depreciation, the fear is that currency weakness could offset the impact from lower commodity prices and see inflation spike in 2016.