HEALTH WEALTH CAREER

TA L E N T & C O M P E N S AT I O N
T R E N D S I N A PA C

06th October 2016

Puneet Swani, Partner

Rewards Practice & Information
Solutions Leader – Asia, ME & Africa

CONFIDENTIAL
The content of this material is intellectual property of Talentnet-Mercer and is intended to be sent
to participants of Talentnet-Mercer's Total Remuneration Survey only. Distribution of this material
in any form without written consent from Talentnet-Mercer is strictly prohibited.
AGENDA

Economic & Market Overview

Workforce Demographics

Talent and HR Trends

Compensation

Talent Mobility

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 ECONOMIC OVERVIEW

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EMERGING MARKETS POSITIONED FOR
S T R O N G E R G R O W T H C O M PA R E D T O G L O B A L
Middle
US World East

GDP: 2.7% (3.2% ▲)

GDP: 1.6% (1.8% ▲) Inflation: 4.7% (4.1% ▼)
Inflation: 1.2% (1.5% ▲) GDP: 2.6% (2.8% ▲) Unemployment: 10% (9.9% ▼)
Unemployment: 4.9% (4.7% ▼) Inflation: 2.8% (3.0% ▲)
Unemployment: 5.8% (5.7% ▲)

Asia

Europe Africa

GDP: 4.3% (4.2%▼)

Inflation: 2.9% (3.2% ▲)
GDP: 2.5% (3.9% ▲) Unemployment: 4.3% (4.2% ▼)
GDP: 1.2% (1.3% ▲)
Inflation: 1.0% (1.2% ▲) Inflation: 6.4% (6.3% ▼)
Unemployment: 9.2% (9.1% ▼) Unemployment: 7.5% (7.5%)

Source: IMA Asia – Aug 2016

World Bank – Global Economic Prospects June 2016
World Employment and Social Outlook – Trends 2016
Figures in brackets indicate forecasted values for 2017 OECD Database 2016

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 DRIVEN BY DOMESTIC DEMAND, EMERGING
E C O N O M I E S A R E FA S T E S T G R O W I N G
2017 GDP 2017 Inflation 2017 Salary Increase
12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%
AU
AU CN
CN HK
HK ID
ID IN
IN JP
JP KH
KH KR
KR MM
MM MY
MY NZ
NZ PH
PH SG
SG TH
TH TW
TW VN
VN
-2.0%
2016 GDP 2.5% 6.5% 1.4% 5.1% 7.1% 0.2% 7.0% 2.3% 8.6% 3.8% 2.5% 6.6% 1.9% 3.6% 0.7% 5.6%

2017 GDP (FC) 2.5% 5.6% ▼ 2.4% ▲ 5.7% ▲ 7.8% ▲ 0.4% ▲ 7.0% 2.5% ▲ 7.7% ▼ 3.5% ▼ 2.8% ▲ 6.3% ▼ 2.7% ▲ 4.2% ▲ 2.1% ▲ 6.1% ▲

2016 Inflation 1.2% 2.0% 2.7% 3.4% 5.6% -0.2% 2.1% 1.0% 9.6% 1.8% 0.5% 1.8% -0.6% 0.3% 1.0% 2.1%

2017 Inflation (FC) 1.6% ▲ 1.8% ▼ 2.4% ▼ 3.3% ▼ 5.8% ▲ -0.2% 2.8% ▲ 1.4% ▲ 8.2% ▼ 2.1% ▲ 1.0% ▲ 4.8% ▲ 0.6% ▲ 1.6% ▲ 1.3% ▲ 2.8% ▲

2016 Salary
3.0% 6.6% 4.5% 7.7% 9.8% 2.2% 7.1% 4.3% 9.9% 5.0% 3.0% 5.8% 3.6% 5.2% 3.7% 8.6%
Increase
2017 Salary
3.0% 7.9% ▲ 4.5% 8.3% ▲ 10.2% ▲ 2.3% ▲ 7.1% 4.5% ▲ 10.5% ▲ 5.6% ▲ 4.3% ▲ 6.1% ▲ 3.8% ▲ 5.6% ▲ 3.8% ▲ 9.2% ▲
Increase (FC)
Source: IMA Asia – Aug 2016
Mercer Asia Pacific Monitor Bulletin Q2 2016
*Average salary increases (excluding freezes) Mercer Asia Market Pulse Survey H1 2016 – Cambodia & Myanmar

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 WORKFORCE DEMOGRAPHICS

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 D E C L I N I N G W O R K F O R C E PA R T I C I PAT I O N
R AT E S A B I G C O N C E R N F O R A S I A
2016 2025 2016 Global Average
90%
78%
80% 77%
71% 69% 71%
70% 68% 67%
65%
67% 67% 67% 65% 63%
65% 65% 65% 63% 64%
64.7%
61% 60% 60%
60% 59% 58% 57%
55% 55% 54% 54%

50%

40%

30%

20%

10%

0%
VN TH CN NZ ID SG PH AU MY KR HK JP TW IN

Source: International Labour Organization Key Indicators of the Labour Market (KILM) 2015

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P O P U L AT I O N P Y R A M I D S H I F T I N G T O A
D O M E A S I A’ S P O P U L AT I O N I S A G I N G

2005
100+ MALE FEMALE
95-99 2016
90-94
85-89 2030
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 6.0%

Source: United Nations, Department of Economic and Social Affairs, Population Division. World Population Prospects: The 2015 Revision

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H U M A N C A P I TA L I N D E X R A N K I N G S
OVERALL OVERALL SCORE BY AGE GROUP (IDEAL SCORE = 100)
COUNTRY
RANK* SCORE UNDER 15 15-24 25-54 55-64 65 +
ADVANCED ECONOMIES

JP 4 83.4 95.8 77.3 79. 85.7 75.6

NZ 6 82.7 95.2 82.3 76.3 85.7 74.1

SG 13 80.9 95.8 76.1 78.7 75.2 60.6

AU 18 80.1 91.4 82.6 74.3 80.8 67.3

KR 32 76.9 90.3 75.4 71.7 78.4 61.6

DEVELOPING ECONOMIES

MY 42 74.3 87.5 76.8 72.1 70.0 42.4

TH 48 71.9 81.7 73.3 67.9 70.7 58.7

PH 49 71.8 81.4 71.0 66.6 74.5 65.3

VN 68 68.4 77.2 75.4 61.2 70.9 59.6

CN 71 67.8 82.8 69.6 63.8 61.6 43.4

ID 72 67.6 84.1 68.5 60.8 63.7 51.6

IN 105 57.7 84.9 56.5 48.1 46.5 33.7

>80 55.0 – 79.9 35.0 – 54.9 <35 Source: The Human Capital Report 2016
*Based on ranking of 130 countries

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WOMEN IN MANAGEMENT ROLES –
W H AT W I L L I T TA K E T O C L O S E T H E G A P ?
FEMALE REPRESENTATION AT THE EXECUTIVE CAREER LEVEL
Current 2015 Representation Projected 2025 Representation

20%
GLOBAL
37%

14%
ASIA
28%

21%
EUROPE
33%

17%
LATIN AMERICA
44%

22%
US AND CANADA
36%

17%
AUSTRALIA AND NEW ZEALAND
34%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Source: Mercer When Women Thrive Report 2016

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 TA L E N T & H R T R E N D S

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GLOBAL MACRO TRENDS:
I M PA C T I N G A N D C H A N G I N G T H E N AT U R E O F
WORK

GLOBALIZATION
DIGITAL WORKING
GROWING DIFFERENTLY

INDIVIDUAL LIVING
CHOICE BIG DATA LONGER

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TA L E N T C H A L L E N G E S I N T H E R E G I O N

Young workforce lacking in depth of expertise

Lack of managerial skills

“Brain Drain” and migration

Improving educational system but low skill confidence

MNCs entering markets and hiring away talent

Compensation costs outpacing productivity

and ability to pass along increased labor costs

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 HIRING INTENTIONS 2015-2016
SLOWDOWN IN HIRING ACROSS ASIA
2015 Increase Headcount Decrease Headcount No Change
2016 Increase Headcount Decrease Headcount No Change
CN 31% 6% 63%
26% 11% 63%
HK 38% 4% 58%
23% 5% 72%
ID 58% 5% 36%
36% 8% 56%
IN 64% 4% 33%
48% 5% 47%
JP 51% 4% 45%
40% 4% 56%
KR 25% 7% 68%
25% 7% 68%
MY 24% 13% 62%
34% 5% 61%
PH 36% 5% 59%
41% 6% 53%
SG 22% 7% 71%
26% 6% 68%
TH 23% 5% 72%
28% 5% 67%
VN 37% 2% 61%
40% 4% 56%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: Mercer Global Compensation Planning Report , Asia Pacific (October 2015)
China Monitor – 2016 Q1 Report
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S T R O N G E R TA L E N T C R U N C H I N A S I A
T H A N T H E G L O B A L AV E R A G E

90% % Having Difficulty Filling Jobs

Asia Pacific Global JP
80%

70%
HK
60% IN
51 T
W
50% 45 45 45 NZ
40 41 41 48
40% SG
31 32
36 38
30% 34 34 35
33 31 31
28 30 CN
20%

10%

%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: 2015 Talent Shortage Survey

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 V O L U N TA R Y AT T R I T I O N R AT E S G E N E R A L LY
HIGHER TO PRIOR YEARS

2014 2015 2016 (Annualised)

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Country AU KH CN HK ID IN JP KR MY MM NZ PH SG TH TW VN
2014 11.9% 13.4% 12.8% 12.7% 12.4% 13.2% 7.0% 7.9% 15.6% 11.9% 12.7% 13.0% 12.9% 14.7% 9.4% 13.2%
2015 8.0% 11.3% 15.0% 13.2% 10.8% 12.2% 7.8% 9.3% 16.1% 15.3% 13.2% 13.1% 12.6% 14.6% 10.8% 14.6%
2016
14.8% 21.6% 16.0% 12.0% 12.0% 28.4% 2.8% 14.0% 24.8% 15.6% 6.0% 17.2% 16.4% 26.0% 12.0% 20.8%
(Annualised)

Source: Mercer Asia Market Pulse Survey , H2 2015 & H1 2016

Mercer Q2 2016 Asia Pacific Monitor Bulletin
Based on average figures Mercer 2015 Total Remuneration Surveys

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 C O M P E N S AT I O N

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 SALARY INCREASES ARE HIGHEST IN
EMERGING MARKETS
75P

Base Salary Increase as % of Overall Payroll Budget 2016 SALARY

INCREASE
14.0% 50P

25P 2017 SALARY

INCREASE
(FORECAST)
12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%
IN MM VN ID CN KH PH LA MY TH KR HK SG TW JP

Source: Mercer Asia Market Pulse Survey H1 2016

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SALARY INCREASE FOR 2016 & 2017
2016 All Industries Chemical Consumer Life Sciences High-Tech
(2017 Forecast) Goods

Country
AU 3.0 (3.0) 3.0 (3.0) 3.0 (3.0) - 3.1 (3.0 ▼)
CN 6.6 (7.9 ▲) 6.2 (6.4 ▲) 6.9 (7.0 ▲) 6.9 (7.0 ▲) 6.7 (7.2 ▲)
HK 4.5 (4.5) 3.8 (3.8) 4.1 (4.1) 4.3 (4.5 ▲) 3.9 (3.8 ▼)
ID 7.7 (8.3 ▲) 8.0 (8.4 ▲) 9.0 (8.6 ▼) 9.0 (8.8 ▼) 7.3 (7.6 ▲)
IN 9.8 (10.2 ▲) 9.0 (9.5 ▲) 9.0 (8.0 ▼) 10.5 (10.7 ▲) 9.3 (9.4 ▲)
JP 2.2 (2.3 ▲) 1.6 (1.9 ▲) 1.9 (2.2 ▲) 1.9 (2.2 ▲) 2.3 (2.3)
KR 4.3 (4.5 ▲) 3.6 (4.4 ▲) 4.7 (4.7) 4.5 (4.6 ▲) 4.1 (4.5 ▲)
MY 5.0 (5.6 ▲) 4.5 (6.0 ▲) 5.4 (5.7 ▲) 5.4 (5.6 ▲) 5.2 (5.5 ▲)
PH 5.8 (6.1 ▲) 4.6 (4.4 ▼) 6.1 (6.3 ▲) 6.1 (6.1) 5.2 (5.4 ▲)
SG 3.6 (3.8 ▲) 3.2 (3.7 ▲) 4.0 (4.1 ▲) 4.1 (4.2 ▲) 3.6 (3.6)
TH 5.2 (5.6 ▲) 4.4 (5.4 ▲) 5.4 (5.4) 5.4 (5.4) 4.8 (5.1 ▲)
TW 3.7 (3.8 ▲) 3.4 (3.9 ▲) 3.8 (3.9 ▲) 3.9 (4.2 ▲) 3.2 (3.4 ▲)
VN 8.6 (9.2 ▲) 7.2 (8.2 ▲) 9.9 (10.2 ▲) 9.7 (9.6 ▼) 8.9 (9.2 ▲)

Source: Mercer Asia Pacific Monitor Bulletin Q2 2016

Average Merit Salary Increase (Excluding freeze (%)) Mercer High Tech Survey – 2nd Edition 2016

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 P AY P A R I T Y I N A P A C
USD ANNUAL TOTAL CASH – TARGET (USD, M EDIAN)
400,000

350,000 US
HK
SG
300,000
TW
250,000 UK
AU
KR
200,000 JP

150,000

100,000

50,000

0
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63
Para-professional Professional Management Top Mgmt

AU HK JP KR TW SG UK US
No updated information. 2016 Mercer Total Remuneration Surveys is
expected to be released by end Oct later this year Source: 2015 Mercer Total Remuneration Surveys

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 P AY P A R I T Y I N A P A C
USD
ANNUAL TOTAL CASH – TARGET (USD, M EDIAN)
450,000

400,000 CN

350,000

300,000 VN

250,000 TH

200,000 PH
ID
150,000 MY
IN

100,000

50,000

0
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63
Para-professional Professional Management Top Mgmt

CN ID IN MY PH TH VN
No updated information. 2016 Mercer Total Remuneration Surveys is
expected to be released by end Oct later this year Source: 2015 Mercer Total Remuneration Surveys

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 P AY P A R I T Y I N A P A C
USD ANNUAL TOTAL CASH – TARGET (USD, M EDIAN)
450,000
CN
400,000
US
HK
350,000
SG
VN
300,000 TW
UK
AU
250,000 TH
KR
JP
200,000 PH
ID
MY
IN
150,000

100,000

50,000

0
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63
Para-professional Professional Management Top Mgmt

AU CN HK ID IN JP KR MY PH SG TH TW VN UK US
No updated information. 2016 Mercer Total Remuneration Surveys is
expected to be released by end Oct later this year Source: 2015 Mercer Total Remuneration Surveys

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TA K I N G A L O O K AT S H O R T T E R M I N C E N T I V E T R E N D S

STI MAXIMUMS ARE LOWER than what they used to be

Moving away from STI targets TO MORE DISCRETIONARY BONUSES

Increasingly, more companies are thinking of STI WITH TIME VESTING DEFERRAL

INSTITUTIONAL DE-LEVERAGING OF PAY: in an attempt to curb excessive risk-taking, STI

leverage is reducing (started with banks, but is permeating across)

BONUS POOL FUNDING largely formula based (% of profits), but increasingly companies
using RISK-ADJUSTED METRICS AND METRICS THAT TAKE INTO ACCOUNT COST OF CAPITAL

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VAR I A B L E B O N U S : TAR G E T S E T F O R 2 0 1 5 I S
H I G H E R T H A N A C T U A L P AY - O U T I N 2 0 1 6
Management Non-Sales
As % of Base Salary

25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
AU CN HK ID IN JP KH KR MY PH SG TH TW VN
2015 (Actual) 9.6% 20.3% 17.8% 21.0% 18.3% 15.8% 17.0% 18.8% 16.0% 13.0% 19.6% 21.4% 13.3% 16.8%
2015 (Target) 16.5% 19.7% 16.5% 17.7% 18.6% 17.2% 17.1% 16.8% 15.3% 16.8% 18.5% 19.5% 19.2% 18.4%

Professional Non-Sales
25.0%
As % of Base Salary

20.0%

15.0%

10.0%

5.0%

0.0%
AU CN HK ID IN JP KH KR MY PH SG TH TW VN
2015 (Actual) 8.0% 17.0% 12.8% 16.7% 14.1% 12.5% 13.4% 14.5% 13.4% 10.4% 15.9% 17.2% 12.0% 13.1%
2015 (Target) 10.9% 16.6% 11.8% 14.3% 14.1% 13.4% 14.8% 13.2% 12.5% 12.0% 15.6% 17.4% 14.5% 13.7%

Source: Mercer Asia Market Pulse Survey H1 2016

Based on average figures AU & CN from 2015 Mercer Total Remuneration Surveys

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TA R G E T T O TA L C A S H C O M P E N S AT I O N F O R H E A D S
O F F U N C T I O N I S G E N E R A L LY H I G H E R I N S I N G A P O R E
Australia *Indicates that a Function
Vietnam
Thailand Head’s average Total Cash
-52% -6%* China Compensation (Target) in AU
-5% is 6% lower as compared to in
-37% SG

Hong Kong

Taiwan 14%
-36%
India

-48%
South Korea

-32% Indonesia

-56%
Philippines
-53% Japan

New Zealand
-20%
Malaysia
-41%
-58%
No updated information. 2016 Mercer Total Remuneration Surveys is
expected to be released by end Oct later this year Source: 2015 Mercer Total Remuneration Surveys

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LT I P L A N S I N A PA C
P R E D O M I N A N T LY S T O C K O P T I O N S A N D R S U ’ S

Stock/ Share Options (2015)
Performance Shares/ Share Units (2015)
Stock/ Share Options (2014)
Performance Shares/ Share Units (2014)
AU
Share Appreciation Rights (SARs) (2015) Restricted Shares/ Share Units (2015)
Performance Cash Units (2015) Long-Term Cash (2015)
Share Appreciation Rights (SARs) (2014) Restricted Shares/ Share Units (2014)
Performance Cash Units (2014) Long-Term Cash (2014)

CN

HK

ID

IN

JP

KR

MY

PH

SG

TH

TW

VN

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: 2014 and 2015 Mercer Total Remuneration Surveys
Note that some of the 2014 percentages are more than 100% 26
© MERCER 2016 as there are more than one long-term incentive indicted
 TA L E N T M O B I L I T Y

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 COST & QUALITY OF LIVING SCORES ARE
H I G H E S T A M O N G S T D E V E L O P E D A PA C
CITIES
COL Index 2014 COL Index 2015 COL Index 2016 QOL index 2014 QOL index 2015 QOL index 2016

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
120

100

80

60

40

20

* Relative to Singapore Source: Mercer COL/QOL Reports

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