By Daniela Aroche

Despite the recovering economy, employers across Asia-Pacific are still adopting a cautious approach in respect to salary increases and the lifting of pay freezes, according to a recent report.

The Asia Pacific Salary Increase Survey conducted by Hewitt Associates - a global human resources consulting and outsourcing firm - reveals that although employees still received reasonable pay increases this year, they were lower than previous years; employers throughout Asia-Pacific continued to keep a tight rein on purse strings and no Asian market experienced a double digit salary increase.

"The recent up-tick in the economy has not yet made its significant impact on pay increase," said Stella Hou, regional leader of the broad-based compensation practice.

"However, we expect that companies will continue to fight for better margins through effective cost management, including management of pay," she said.

Top performers in particular will benefit from this - nearly 70% of the responding organisations reported using individual performance awards as an incentive to retain top talent and the majority of the organisations (over 75%) confirm that they will not be reducing year-end variable payout.

"Companies realise that they cannot afford to lose talent. They know 'high performers' will help them lead the organisation out of the storm into the winning field. Even for those companies experiencing unprecedented levels of uncertainty and cost reduction pressures, they tend to reward and retain their best talent with special incentives," Hou added.

Overall, India had the highest percentage pay rise in the region with the average overall salary increase at 6.3%, closely followed by Indonesia (6%), China (4.5%) and the Philippines (4.3%).

Singapore and Hong Kong saw lower salary increases, ranging from 1.8 % to 1.4% respectively, just ahead of Japan at 1.2%, the lowest in the region. These markets are also the most likely to endure the longest period of salary freeze, over 60% of companies in these regions indicated that they intend to keep wages constant. Employees across India and China, however, may be able to look forward to a greater rise in salary with only 26.1% and 30.8% of employers in these regions respectively agreeing to the same.

Hou is also cautiously optimistic that employees across the Asia Pacific region can look forward to more robust salary increases in the coming year:

"In the next few years, emerging growth markets in Asia as compared with mature markets are expected to provide slightly higher salary increases, as they continue to struggle with the hiring and retention of top quality talents," she said.

The worst may also be over in terms of company-wide layoffs - the majority of responding organisations across the Asia-Pacific region indicated that while they plan to hire strategically as a measure to control workforce size, they do not plan to make further layoffs or reduction in staff.

Market highlights:

Australia

* Overall salary increases for all participants averaged 2.1% in 2009. The average salary increase for 2010 is expected to be 3.4%.

* 50% of participating organisations reported a salary freeze for 2009 and 14.6% expect a freeze in 2010.

* The majority of the responding organisations (58.5%) are planning to hire strategically as a measure to control workforce size

* 92.9 % of respondent organisations have variable pay programs; individual performance awards are the most prevalent

Hong Kong

* Overall salary increases for all participants averaged at 1.4% in 2009. The average salary increase for 2010 is expected to be 2.9% .

* 8.2% of participating organisations reported salary cuts for 2009 whereas only 2.1% have projected a salary cut for 2010.

* The majority of responding organisations (41.9%) are planning to hire strategically as a measure to control workforce size, not many organisations are planning layoffs or reduction in staff.

* 86.8% of the organisations have variable programs; individual performance awards are the most prevalent.

Singapore

* Overall salary increases for all participants averaged at 1.8 % in 2009. The average salary increase for 2010 is expected to be 2.6%.

* 60.3% of the responding organisations have reported a salary freeze for 2009, whereas 12.8% expect a freeze in 2010.

* The majority of the responding organisations (57%) are freezing headcount to control the workforce size in 2009 and/or 2010. Only 24.6% of the responding organisations are planning/have already implemented layoffs or reduction in staff.

* 88.1% of the responding organisations offer variable pay programs; individual performance awards is the most prevalent plan.