But the tone shifted abruptly toward the beginning of this year: Executive Pay Hike Slows Down; Study Says Executives Paid Too Much.
The first signs are out that the steep rise in executive salaries in Asia, which has lasted for much of the last decade, is not going to be sustained. The latest figures from the Corporate Resources Group (CRG) annual executive compensation survey reveal modest growth: Salaries increased by an average of less than 5 percent for the positions covered in this report, compared to about 30 percent two years ago.
This confirms the expectations of managers surveyed by Chief Executive Asia earlier this year. Close to two-thirds of respondents expect only a moderate increase in salaries over the next two years, and one in seven actually see a flattening out.
Blame the trend on structural adjustments, on lower productivity growth, and on advantages being lost to developing countries and even to the old world. Whatever the cause, the same alarm has been sounded to companies around the region: put a rein on compensation or risk pushing your costs way too high.
Salary ceilings. In Korea, an official of the Federation of Korean Industries disclosed in September that that country's 30 top business groups had agreed to freeze total spending on salaries across the board, including executive pay and benefits. To overcome economic difficulties, they agreed to restructure their businesses aggressively and streamline their organizations and cut their expenditure on entertaining, the official said in a Reuters report.
The news for Thailand's executives wasn't any better. A slumping economy, missed corporate targets, and higher operating costs mean many firms are trying to tighten belts by cutting bonuses, raises, and benefit packages, reports Bangkok Post, referring to the reduction of the 1996 year-end bonuses at some companies in Thailand. For executives in the hard-hit finance and securities sector particularly, the days of 12- to 18-month bonuses are likely to be over. What's worse is that 1997 is likely to be no different, according to a survey of 122 companies by human resources specialists Hewitt Associates.
Slowing economic growth is causing the decline in pay rises in Singapore, suggests Hay Management Consultants. Hay's figures for last year also revealed that companies had granted fewer merit increments. Still another survey, conducted by Remuneration Data Specialists, predicted somewhat lower pay increases this year.
The Singaporean trend is mirrored in Malaysia, where purchasing power actually decreased last year. Singaporeans and Malaysians alike are not optimistic about overall salary increases this year, based on the Chief Executive Asia survey, where only those from Indonesia, India, and the Philippines see strong growth in 1997.
But even in Indonesia, skyrocketing salaries will have to level off sooner or later, warns Rina Sjoekri, country manager
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