Salary Demands of Millennials in Asia: Expectations vs Reality
Millennials are becoming more important in the workforce. They are often seen as tech-savvy, curious, passionate, flexible and adaptable, attributes that a rapidly changing workforce require. Millennials comprise up to 25% of Asia Pacific workforce, and PWC forecast them to be 50% of the global workforce by 2020. In order to secure the services of these young, future leaders, companies need to know what their demands are, and one of the major challenges is none other than salary.
A 2016 survey by Universum Global ranked major Asian economies in terms of salary expectations of engineering and business bachelor graduates, all of whom fall under the millennial category.
Based on this survey, South Koreans demand the highest salary in both majors, followed by Japan, Singapore, and Hong Kong. Trailing much farther behind are emerging China and India, where expected salaries almost halved of those from the mentioned developed economies. Within the ASEAN region (excluding Singapore), Thailand leads followed by Malaysia, Indonesia, the Philippines, and Vietnam.
Are expectations close to the reality? A survey by JobStreet.com, a leading recruitment company in Asia, found that a whopping 68% of Malaysian employers surveyed cited “unrealistic salaries and benefits” as reasons to why it was difficult to hire graduates. Average salary offer ranges between MYR 2,100 – MYR 2,500 (USD 507.8 – USD 604.5), the survey showed, while up to 60% of graduates expect RM 3,500 (USD 846.3). Another survey, by Universum, show that average salary expectation for engineering graduates is MYR 3,663 (USD 885.7), while for business graduates it is MYR 3,265 (USD 789.5).
Across the straits, the average monthly graduate salary is just SGD 2,680 (USD 1,966.1) across various disciplines. Universum’s findings indicate the demanded salary averaged at SGD 3,294 (USD 2,416.6) for business graduates, and SGD 3,557 (USD 2,609.5) for engineering graduates.
In Hong Kong, Universum found that engineering graduates expect to make HKD 19,028 (USD 2,453.24), while business graduates expect HKD 17,471 (USD 2,252.5). On average, expected salary of graduates is HKD 18,000 (USD 2,320.7) and this is already a decline of 4.8% compared to the figure last year. The starting average salary is HKD 13,750 (USD 1,772.7), according to a joint study by Hong Kong Management Association, and Business Administration and Human Resource Development Strategy Research Centre of Hong Kong Baptist University.
Similar disparity prevails in Indonesia, where expected salaries of engineering graduates are about IDR 11.155 million (USD 854.8) and business graduates expect IDR 9.69 million (USD 742.6). Compare these to the average paid salary of graduates in Indonesia of IDR 4.79 million (USD 214.8).
Vietnam is very likely the only country within the survey where graduates’ expect salary of USD 7,117 annually fell short of the average of what companies offer at USD 9,868 annually.
There are many reasons why such a disparity exists. In developed economies of Hong Kong and Singapore, the high cost of living, level of urbanization and relatively lower unemployment rate help to explain salary expectations. With rising cost of accommodation, recurring costs of transportation and cost of imported food inflation, it is therefore understandable that millennials scale up their demands in order to beat rising costs. Low unemployment rate generally instills the belief that there are enough jobs to go around, therefore they need not lower their expectations in order to secure work.
Among the countries mentioned above, Malaysia and Thailand aspire to transition from middle-income economies to high-income ones. On top of rising cost of living, both nations struggle to overcome the downside drag on salaries caused by reliance on low-paying foreign labor. Therefore, salary expectations gap may be caused not just by inflated expectations, but also pay structure of companies that have long been reliant on low-paying workforce.
Graduates also believed that higher salary expectations may be backed by the fact that they graduated from a recognized university. This holds water in some ways. A survey by the Ministry of Education Singapore found that graduates from National University of Singapore graduates in business administration averagely makes SGD 3,425.3 (USD 2,5128), higher than what was demand from Universum’s survey. Meanwhile, graduates from the engineering faculty are on average paid SGD 3,463.7 (USD 2,541), just slightly lower from the figure of Universum’s survey.
Personal aspirations coupled with trying times also play their parts in determining graduates’ salary expectations. Despite being known as the generation of renters, a survey by CBRE Global Research in 2016 indicated that up to 65% of millennials in Asia intend to purchase their own properties. With property prices on the rise in Asia and likely out of reach of many millennials, it is no surprise that salary expectations are ramped up. Indeed, the same survey showed that up to 71% of respondents opine that salaries are not keeping up with property prices, and 63% agreed that they are forced to rent because they could not afford to buy properties.
High salary demands may also be attributed to the way millennials are raised. Millennials grew up in an environment where their needs and wants are almost always satiated, not to mention early exposures to paid services, conveniences and entertainment. These experiences have likely imbued them with a lifestyle they cannot do without, a lifestyle that may require higher upkeep, hence higher salary expectations.
But like it or not dear employers, millennials are not only here to stay, they will grow in strength and numbers. Finding better ways to manage their expectations, be it injecting them with a big dose of reality, moulding the way in which they think, or simply bartering trade-offs, will be in your best interest.
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