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Higher pay rises reflect business optimism in Indonesia: Mercer
Employees of private companies in the country are likely to see pay rises next year amid the assumption of higher inflation and stable economic growth, the Indonesian office of global consulting firm Mercer has said
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mployees of private companies in the country are likely to see pay rises next year amid the assumption of higher inflation and stable economic growth, the Indonesian office of global consulting firm Mercer has said.
In its 2018 Total Remuneration Survey, the firm forecasted an 8 percent average pay rise for private sector workers in 2019, higher than this year’s figure at 7.6 percent.
Mercer Indonesia career leader Astrid Suryapranata said the survey, which included over 290,000 respondents from 545 local and multinational companies, reinforced the optimism among businesses over a stable macroeconomic outlook despite persisting concerns attributed to the oncoming political year.
“The salary of employees in eight important industry sectors that we studied shows a fairly good increase in forecasted salaries,” Astrid said in a recent press briefing in Jakarta. “In fact, most industries are expected to see salary increases in 2019 compared to 2018.”
The life sciences sector, she added, showed the highest pay rise estimate at 8.8 percent. Besides that, Mercer observed sectors such as mining, chemicals, consumer goods, technology, automotives and financial services. The estimate is similar to the minimum wage raise by the Manpower Ministry, which announced in October that it had set the margin of 8.03 percent for each province. Like private companies, the ministry took inflation and economic growth into account.
The overall forecast reflects the confidence of companies operating in Indonesia in the upcoming year as 80 percent of corporate respondents relied on performance as a major factor in determining salary increases for employees.
Furthermore, over 30 percent of the surveyed companies planned to take on more people through recruitment and freelance schemes, said Astrid. More than half had also set their mind to maintaining their employee headcount next year, whereas only 8 percent planned to downsize.
“The main agenda of these companies is digitalization and automation for the sake of things like efficiency and marketing. As a result, they are offering jobs that require more complex skills that machines cannot do,” she said.
Globally, the eight most in-demand jobs are data analysts, product designers, computer and mathematical experts, specialized sales representatives, architects and engineers, senior managers, government relations representatives and human resource staffers.
Meanwhile, in Indonesia, companies found it difficult to recruit people for marketing and sales jobs, a task made harder by the high turnover in the sector.
On the other hand, although companies are aggressively taking on IT workers, the specific requirements for the positions led to a more stable turnover rate.
“We can see that companies mostly want employees who can do data analysis, digital marketing, programming and IT development,” said Astrid.
Indonesia’s forecasted rise in salaries means it is expected to better its peers in the Asia-Pacific, even though it is not as high as other developing countries.
For instance, Bangladesh, Vietnam and India booked the highest forecast at 10 , 9.8 and 9.2 percent respectively. Meanwhile, private sector employees in developed nations are likely to see lower salary rises, such as Australia at 2.6 percent and Japan at 2 percent.
“Despite some variations across the Asia-Pacific, the overall hiring outlook is positive, with 66 percent of companies looking to maintain headcount in order to seize diversification and growth opportunities in the face of ongoing disruption,” said Puneet Swani, partner and career business leader for Mercer International Region.
Similar to Indonesia, other countries in the region would see soaring demand for digital skills with companies offering generous incentives and retention bonuses to attract talent, he said.
