SINGAPORE - Salaries for senior management executives are up to 14 per cent higher than those in Hong Kong, a study has found. Salaries for top management executives are also 34 per cent higher in Singapore than in Hong Kong.
Not only is Singapore paying senior executives more than Hong Kong firms are, the Towers Watson's 2013/2014 Global 50 Remuneration Planning Report also states that C-suite pay levels exceed those of other countries in the Asia Pacific region.
"Growth in private banking in Singapore and its development - or regeneration - as a regional hub for international companies has drawn a lot of high-level talent to the city and that's reflected in the C-suite compensation," said Sambhav Rakyan, Data Services practice leader, Asia Pacific at Towers Watson.
Towers Watson forecasts average salary increases in both centres to be 4.5 per cent this year.
The report revealed that Asia Pacific's developed economies have the highest pay levels - Australia's entry pay level is eight to 11 times more than China, the Philippines and Indonesia, and 15 times that of Vietnam. Australia also pays discernibly higher than Japan, Singapore and Hong Kong through to middle management, after which the gap narrows.
Pay levels in China lags that of Hong Kong across most of the job categories, but at senior management level - there is convergence. At top management, remuneration is 11 per cent more in China (US$215k) than in Hong Kong (US$193k), according to the Towers Watson report.
Salaries for senior management have risen in China over the past few years because of a shortage of talent at this management level. It means that top-level pay in China is comparable to that elsewhere in the world.
Opportunities in India
More eye-catching, however, is the comparison between China and India. Striking differences exist between the region's two biggest labour forces. Based on the survey findings, labour costs for senior executives and top management is lower in India. At senior level, executive pay in China is more than twice that in India (US$94k).
For international companies, the sharp fall in the value of the Indian rupee against the US dollar in 2013 contributed to reducing labour costs in India. It contrasts with China where the renminbi appreciated against the dollar. The rupee is down around 12 per cent on the year, while the renminbi has risen almost 3 per cent.
"The large influx of Indian returnees following the global financial crisis helped India to get more CEO talent," said Clare Muhiudeen, Managing Director, Talent & Rewards, Asia Pacific, Towers Watson. "But with higher rates of inflation in India than in China, that gap will narrow. We expect average salary increases in India to be higher than China's 8.5 per cent. That said, India clearly has more affordable labour than China and that's the way it'll be for the foreseeable future."
Other fundmentals have a bearing too. China's labour force is expected to fall for the second year running to 795 million in 2014 from 798 million in 2013, while unemployment is forecast to be 6.1 per cent (6.4 per cent in 2013). In India, however, while unemployment is expected to fall to 8.4 per cent from 8.8 per cent in 2013, it remains well above that of China. Meanwhile its work force is set to reach 492 million this year, up from 487 million in 2013.