Asia Pacific Monitor Bulletin - imercer › uploads › Asia › pdfs › apm_q1_2011... · 2011-03-24 · Asia Pacific Monitor Bulletin First quarter 2011 4 Asia Pacific Monitor

First quarter 2011

GDP growth, inflation rate and HR issues in the Asia Pacific

1. Overview

Asia Pacific Monitor Bulletin

Asia remains firmly in the lead of the global economic recovery and strong growth in the region is set to continue, according to IMF. In 2011, regional growth is expected to moderate to a more sustainable pace of 6.8 percent. The East Asia and the Pacific region, which includes China, Malaysia, Thailand and Indonesia, are forecasted to grow 7.8 percent in 2011.

Strong economic growth is leading to new policy challenges. Inflationary pressures are continuing to build, while prices in some property markets are growing at double-digit rates. With Asia set to remain an attractive destination for foreign investment given the sluggish recovery in the U.S. and Europe, capital inflows could add further to domestic price pressures in the period ahead.

Most countradia too continued to battle with rising food prices, making for an eventful month in the Asia Pacific region. Many emerging economies in the Asia Pacific have started focusing on domestic consumption to sustain growth. . Asian economies from China to Vietnam are picking up speed after policy makers boosted spending and slashed borrowing costs to counter the global recession.

In North Asia, China’s economy continues to boom. China’s

economy is forecasted to expand at a robust 9.7 percent in 2011.The Japanese government has forecasted that the economy will grow at a pace of 1.5 percent annualized for the fiscal year that begins on April 1 this year. Crucial to Japan’s progress will be a continuing global recovery and the government stimulus measures that continue to be in force. Consumer prices should begin to rise sometime this year according to government. Taiwan’s future appears solid. With the economy surging ahead, the central bank’s focus is on inflation. The World Bank has forecast Taiwan’s economy to grow at an impressive rate of 5 percent this year, led by increased trade with China and other emerging markets in the Asia Pacific. Hong Kong’s growth is expected to be near trend, but inflation looks set to rise further. Forecast for 2011 real GDP growth is at 4.5 percent but higher inflation rate of 3.7 percent. Despite persistent tension between South Korea and North Korea, the Asian giant’s economic growth continues to impress. The government is hoping that the South Korean economy will register at least 6 percent growth this year. Inflation is also expected to spike with the Chinese New Year and adds to the already critical situation regarding meat supplies.

In this issue:

1. Overview 1

2. Economic issues 3

3. HR and labor Issues 15

4. Innovation corner 20

5. Adding intellectual horsepower to HR 20


First quarter 2011

2 Asia Pacific Monitor Bulletin - First Quarter

In Southeast Asia, World Bank expects fairly moderate growth from the Philippines this year. Philippines economy will be expanding at 5 percent in 2011 and 5.4 percent in 2012. Indonesia fared better than its neighbors during last year’s world slump because it relies less on exports, and consumer confidence has been buoyed by the most stable political climate since the 1998. Malaysia posted better-than-expected economic growth in 2010 and expects that the growth would continue to moderate this year. Singapore raised its inflation forecast for 2011 as the city-state’s booming economy as well as surging food and energy prices worldwide were pushing up living costs. The steady pace of growth in the advanced economies is expected to lend support to Singapore’s manufacturing activities.

Southeast Asia’s second-largest economy Thailand grew a better-than-expected 1.2 per cent in the final quarter on a seasonally adjusted basis, after contracting a revised 0.3 per cent in the third, due to robust exports, stronger domestic consumption and high tourist arrivals. In Vietnam growth in manufacturing investment will be robust in the next few years and construction will find support in 2010-2011 by state investment in infrastructure development projects because foreign investors remain positive about Vietnam’s long-term prospects.

The Indian economy, according to the World Bank, is expected to grow 8.4 percent this year and 8.7 percent in 2012. With food inflation levels touching alarming highs, the country’s economic condition continues to give mixed signals. The Index of Industrial Production or IIP saw growth slowing to a mere 2.7 percent in November over a year earlier. Consumer durables led the fall.

Recent floods of 2010 in Pakistan also played havoc with infrastructure and agriculture. It will definitely put negative impacts on the Pakistan economic growth rate in 2011 and especially on agricultural growth in year 2011.

The Australian economy lost momentum sales and hours worked slowed further in the December quarter. The mining and resource boom is still progressing on an awesome scale. New Zealand’s economic recovery in 2010 failed to live up to the forecast hinted at early in the year.

China, India, South Korea, Australia and Taiwan have also been forced to increase lending rates as central banks try to be vigilant in the face of strong economic growth following the global downturn.

Asian markets will remain attractive for investors. The strong rise of domestic consumers within Asia as well as continued investment spending across the region will present good investment opportunities for investors in 2011.

Rebalancing Asia’s growth remains the top policy priority over the medium term. With external demand from advanced economies unlikely to return to pre-crisis levels in the foreseeable future, Asia will need stronger domestic demand in order to continue along a robust growth path. A broad range of reforms are needed to support domestic consumption and investment, including strengthening social safety nets, ensuring access to credit, easing restrictions in service sectors, and improving infrastructure.


First quarter 2011

3Asia Pacific Monitor Bulletin - First Quarter

2. Economic issues

Global and Regional GDP at a glance

GDP- Global and Regional

Source: IMA Asia, February 2011

* Oct 2010 over Feb 2011

Chart 2: Asia Pacific GDP and CPI at a glance

APAC – GDP and CPI in February 2011

Source: IMA Asia February 2011

3 countries with the highest change in

GDP * CPI *Singapore 8.2 () Vietnam 4.5 ()

Thailand 2.3 () South Korea 3.3 ()

Taiwan 2.0 () Hong Kong 2.7 ()


First quarter 2011


South East AsiaIndonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam

Data snapshot – GDPEconomic growth 2009 2010 Feb, 2011 Trending Indonesia 4.6% 6.1% 7.0%

Contributors to the trend � Compared to the same period (Q3 2010 to Q3 2009, (year-on-year)), Indonesia’s GDP third quarter of 2010 grew by 5.8 percent. The increase is coming from all sectors, with transport and communication as the biggest growth sectors.

� Compared to Q2, 2010 quarter, the GDP has increased by 3.5 percent. The growth was contributed by all sectors with the highest growth in Agricultural Sector that has increased by 6 percent.

� Increases in growth were experienced in the following sectors (Q2 2010 over Q3 2010):– Agriculture, Livestock, Forestry & fishery

– Transport and Communication

– Construction

– Trade, Hotel and Restaurant

– Mining and Quarrying

– Manufacturing Industry

– Financial, Ownership & Business Services

– Services

– Electricity, Gas and Water Supply

� There is no sector which showed the decline during Q3 or Q4 2010.Malaysia -1.7% 7.2% 5.5%

Contributors to the trend � The Malaysian economy registered GDP growth of 5.3 percent in Q3, 2010. For Q3, 2010, the performances of the respective sectors were as follows: (a) The services sector expanded by 5.4 percent supported by expansion in private consumption and

trade related activities.

(b) The manufacturing sector continued to grow, albeit at a modest rate of 7.5 percent

(c) The agriculture sector continued to register a positive growth of 2.7 percent

(d) The construction sector strengthened further by 2.8 percent led by increased civil engineering and non residential activities.

� For the whole year of 2010, the Malaysian Government expected the economy to expand by 7 percent. The World Bank, in their Malaysia Economic Monitor report dated 8 November 2010, on the other hand, forecast the Malaysian economy to register a growth of 7.4 percent in 2010 before easing to 4.8 percent in 2011.

� Increases in growth were experienced in the following sectors:– Manufacturing: This sector surged by 7.5 percent mainly attributable to strong growth in sub-

sectors like Electrical & Electronic (by 8.7 percent), Petroleum, Chemical, Rubber & Plastic products (by 5.7 percent) and Transport Equipment & Other Manufactures (by 9.3 percent).

– Services: This sector sustained its growth momentum at 5.4 percent for Q3, 2010. The growth was mainly contributed by the Finance & Insurance sub-sector which grew by 6.4 percent, the Communication sub-sector by 9.1percent, the Real Estate & Business Services sub-sector which grew by 6.2 percent and the Transport & Storage sub-sector which grew by 5.5 percent underpinned by steady performance in passenger transport.

� Decreases were experienced in mining and quarrying sector which shrank by 1 percent in Q3, 2010 mainly due to decline in the production of crude oil (dropped by 4.2 percent) and condensate (declined by 14.5 percent)


First quarter 2011


Data snapshot – GDPEconomic growth 2009 2010 Feb, 2011 Trending Philippines 3.8% 0.9% 7.3%

Contributors to the trend � The Philippine economy is enjoying solid, broad-based growth that is expected to continue through 2011. All sectors except for drought-affected agriculture are expanding, with growth currently led by booming fixed investment and continued growth in manufacturing, with production rising 22 percent year-on-year in July and 25.7 percent year-on-year in August. Though the IMF has raised its 2011 forecast to 5 percent growth Philippine government expects 6.5 percent with 7 percent possible if the Philippines can attract more foreign direct investment (FDI).

� The improved business outlook is consistent with the expected broad-based, solid economic growth this year which draws support from the recovery in export revenues, moderate inflation, and steady growth of overseas Filipinos’ (OFs) remittances, stable peso and renewed confidence in the new administration. Aggressive marketing of the Philippines as a preferred investment site has also become as one of the main focus of the new administration.

� The mining sector could be a boom in the coming years particularly if mineral prices remain high and the new government can create the right environment for foreign mining firms to enter. On going strength in the consumer sector and export demand will continue to support GDP growth in 2011.

� The Philippines completed 2010 with muted inflation (3 percent year-on-year for November, trending down from 4.4 percent in April). The central bank has held rates steady for the past 16 months while the peso is trading at 43.9 per US$, 6 percent higher than a year ago.

� Increases in growth were experienced in the following sectors:

� Exports (top Philippine exports for all Countries during November 2010 (year-on-year growth)– Gold

– Petroleum Products

– Coconut Oil

– Woodcrafts and Furniture

– Metal Components

– Electronic Products

– Other Products manufactured from materials imported on consignment basis

– Articles of apparel and clothing accessories

� Import (top Philippine imports from all countries during November 2010 (year-on -year growth)– Transport Equipment

– Cereals and Cereals Preparations

– Organic and Inorganic Chemicals

– Plastics in Primary and Non-Primary Forms

– Telecommunication Equipment and Electrical Machinery

– Electronic Products

– Feeding Stuff for Animals

– Iron and Steel

– Mineral Fuels, Lubricants and Related Materials

– Government spending

– Consumer spending, both public and private

– OFW remittances

� Decreases were experienced in Cathodes and Sections of Cathodes, of Refined Copper, Ignition Wiring Set and Other Wiring Sets Used in Vehicles, Aircrafts and Ships.


First quarter 2011


Data snapshot – GDPEconomic growth 2009 2010 Feb, 2011 Trending Singapore 0.8% 14.5% 6.8%

Contributors to the trend � Based on advance estimates released by Ministry of Trade and Industry (MTI), Singapore’s economy expanded by 12.5 percent on a year-on-year basis in the fourth quarter of 2010. There was also a positive growth of 10.5 percent as compared to the preceding quarter. On a seasonally adjusted quarter-on-quarter annualized basis, the economy picked up by 6.9 percent, from the contraction of 18.9 percent in the previous quarter.

� For the whole of 2010, it was estimated that the economy have expanded by 14.7 percent. This is in line with MTI’s earlier forecast of 15 percent for the year.

� Increases in growth were experienced in the following sectors:– Economic growth in the fourth quarter was contributed by a strong expansion in the

manufacturing sector. On a year-on-year basis, the sector grew by 28.2 percent, up from a growth of 13.8 percent in the third quarter. On a quarter-on-quarter annualized growth rate, the manufacturing sector increased by 20 percent, after a contraction of 53.4 percent in the previous quarter. This was led by growth in the biomedical manufacturing cluster, which also saw a strong rebound in pharmaceutical output.

– For the services-producing industries, it registered a growth of 8.8 percent on a year-on-year basis. The services sector also grew by an annualized rate of 4.7 percent, up from 0.6 percent in the third quarter of 2010. This was largely supported by the financial services sector, where there was an increased activity for Asian Currency Unit (ACU), commercial banking and foreign exchange trading. The tourism-related services sectors were also boosted by strong visitor arrivals from the region.

� Construction sector contracted by 1.2 percent on a year-on-year basis in the last quarter of 2010, down from a growth of 7.1 percent in the previous quarter. On a quarter-on-quarter annualized growth rate, it declined by 18.5 percent mainly due to a decline in private sector construction activities.

Thailand -2.3% 7.8% 5.5%

Contributors to the trend � The economic growth was supported by a global economic recovery and a continual improvement of domestic demand. Although during the last quarter of 2010, Thailand had severely suffered from flood but its impact on real sector was limited. Moreover, the higher than previously forecasted growth of global economy and trade volume will be the key supporting factors for exports sector.

� Increases in growth were experienced in the following sectors:– Private consumption on durable goods

– Prices of major agriculture products

� Decreases were experienced in unemployment rate.

Vietnam 5.3% 6.8% 8.3%

Contributors to the trend � Generally in 2010, GDP increased by 6.8% against 2009. This growth is rather higher than that of 6.31% in 2008 and much higher than that of 5.32% in 2009, exceeding the set goal of 6.5%

� GDP in 2010 has increased by 6.8 percent resulted by increase in:– Agriculture, forestry and fishery (2.78%)

– Industry and construction (7.7%)

– Service (7.52%)


First quarter 2011


Data snapshot – InflationEconomic growth 2009 2010 Feb, 2011 Trending Indonesia 4.8% 5.1% 9.0%

Contributors to the trend � The inflation calendar rate (January-December 2010) is 6.96 percent. It is far exceeding the upper end of Bank Indonesia’s target range 4 – 6 percent. The major culprit was food prices. Single inflation in December 2010 is 0.92 percent. Almost all factors experienced increase, with bigger increase contributed from foodstuff.

� Quarterly movements in the prices which resulted in inflation during last quarter includes:– Foodstuff

– Prepared food, Beverages, Cigarette and Tobacco

– Clothing

– Transportation, Communication and Financial Services

– Housing, Water, Electricity, Gas and Fuel

– Education, Recreation, and Sports

– Health

� All other sectors are relatively stable and no sector showed any decline.

Malaysia 0.6% 1.7% 4.0%

Contributors to the trend � Headline inflation increased by 2.2 percent in December 2010, bringing the overall 2010 inflation rate to 1.7 percent (as reported by Malaysia Statistics Department in their report released on 19 January 2011). The 2010 increase in inflation rate was mainly due to increases in Food & Non-Alcoholic Beverages and Non-Food which increased by 2.4 percent and 1.3 percent respectively.

� The World Bank in their Malaysia Economic Monitor report dated 8 November 2010 forecast the inflation figure to be at 2.4 percent for 2011 and to quicken to 2.5 percent in 2012.

� Quarterly movements pushing inflation upwards include:– Food & Non-Alcoholic Beverages which rose by 2.4%

– Transport which rose by 1.6%

– Housing, Water, Electricity, Gas & Other Fuels which rose by 1.1%

� Areas adding downward pressure on inflation include: – Clothing and footwear (1.4%)

– Semi-durable goods (0.9%)

– Communication (0.2%)

Philippines 3.3% 3.8% 4.5%

Contributors to the trend � The annual headline inflation was at 3.0 percent in December which was the same rate posted in November. Higher price increases in food, beverages and tobacco (FBT) and clothing index were offsetted by the slower annual growths registered in fuel, light and water (FLW), services and miscellaneous items index.

� The oil companies implemented an increase on the price of gasoline by P0.50/liter, and diesel by P1.00/liter, effective 25 January 2011.

� Areas adding upward pressure on inflation include:– Excluding selected food and energy items, core inflation eased to 3.4 percent in December from

3.5 percent in November. The annual average core inflation rate was 3.7 percent in 2010 from 4.1 percent in 2009.

– The annual inflation in the National Capital Region (NCR) slowed down to 3.4 percent in December from 3.6 percent in November brought about by the lower annual price increments in FLW and services index. The annual average inflation in the area for 2010 was 4.0 percent, higher by 2.4 percentage points than the 1.6 percent in 2009.


First quarter 2011


Data snapshot – InflationEconomic growth 2009 2010 Feb, 2011 Trending Contributors to the trend – Annual price movements in Areas Outside the National Capital Region (AONCR) remained at 2.8

percent in December as higher annual price uptick in FBT, clothing and FLW index was offsetted by the slower annual price hike in services index. The same was recorded in previous month’s rates in H&R and miscellaneous items index. The average inflation for the year at 3.7 percent was lower by 0.2 percentage point than the 3.9 percent registered in 2009.

– Increases in consumer prices were generally slower at 0.5 percent in December compared to 0.8 percent in November. This was due to the deceleration in the price overall prices gains in FBT and FLW index. Declines in the prices of selected food items such as rice in some regions and corn, fruits and vegetables in NCR effected the deceleration in the monthly growth rate of the national FBT index. Moreover, lower charges for electricity rates in NCR contributed to the downtrend.

� Areas adding downward pressure on inflation include: – Increases in consumer prices were generally slower at 0.5 percent in December compared to 0.8

percent in November. This was due to the deceleration in overall price gains in FBT and FLW index.

– Declines in the prices of selected food items such as rice in some regions and corn, fruits and vegetables in NCR effected the deceleration in the monthly growth rate of the national FBT index.

– Lower charges for electricity rates in NCR contributed to the downtrend.

Singapore 0.6% 2.8% 4.5%

Contributors to the trend � Consumer Price Index in December 2010 increased by 0.2 percent compared to prior month due to higher costs of transport, food and ‘recreation & others’. 2010 consumer price index went up by 2.8 percent as compared to 0.6% in 2009. Higher costs of transport, housing and food were the main factor for the increase in 2010.

� Compared with the same period last year, consumer price index rose by 4.6 percent. This was due to higher costs of transport, food and housing. As a result of higher prices of cars and petrol, transport cost increased by 12.8 percent on a year-on-year basis. Housing cost increased by 5.1 percent as a result of higher accommodation costs and electricity tariffs during the year 2010. Food prices increased by 2.1 percent on annual basis due to more expensive prepared meals and ingredients.

� Quarterly movements pushing inflation upwards include:– Transport cost hiked up by 2.6% due to higher prices of cars and petrol.

– Food prices also increased by 0.2% due mainly to higher cost of prepared meals.

– As a result of pricier holiday travel costs, the index for ‘recreation & others inceased by 0.3%.

� Housing cost declined by 1.1% during December 2010, mainly due to rebates for service and conservancy charges brought the inflation downwards.

Thailand -0.9% 3.3% 6.0%

Contributors to the trend � Headline inflation in 2011 is expected to be in a range of 2.5-3.5 percent. Cost pressure could occur if the agricultural product prices increase too quickly due to the supply shock which was caused by the natural disaster.

� Quarterly movements pushing inflation upwards include:– Volatile oil prices

– Minimum wage increases

– Upward adjustment of public sector salaries

– Rising domestic farm prices due to unfavorable weather (drought )

Vietnam 6.7% 9.2% 13.0%

Contributors to the trend � CPI in Dec 2010 rose by 11.8% against that of same period in 2009. 2010’s average CPI increases by 9.19% against that of 2009.


First quarter 2011


North AsiaChina, Hong Kong, Japan, South Korea, Taiwan

Data snapshot – GDP Economic growth 2009 2010 Feb, 2011 Trending China 9.2% 10.3% 9.6%

Contributors to the trend � Beijing’s announcement that the monetary policy will return to “prudent” in 2011 from a “moderately loose” setting adopted in late 2008 was expected and fits within existing efforts to cool overheating. It is an appropriate step and it should slightly reduce GDP growth next year. Beijing is struggling to control a surge in its money supply (the M2 definition of money is now larger in China than in the US, an economy 3-times the size of China).

� Increases in growth were experienced in the following sectors:– Investment

– Household final consumption expenditure.

Hong Kong -2.8% 6.7% 5.6%

Contributors to the trend � The Hong Kong economy remained robust in the third quarter of 2010. Real GDP expanded briskly further by 6.8 percent year-on-year, with a strong growth of 7.1 percent in the first three quarters of 2010. GDP grew by 0.7 percent in real terms in the third quarter on a seasonally adjusted quarter-to-quarter comparison. The pace of economic activity is expected to be moderated by mid-2011 due to China’s monetary tightening policy and an expected slowdown in Hong Kong’s property market from the second half of year 2011.

� Increases in growth were experienced in the following sectors:– Wholesale, retail and import and export trades, restaurants and hotels

– Financing, insurance, real estate and business services

– Community, social and personal services

– Local manufacturing, transport, storage and communications

– Construction

� Decreases were experienced in the prices of electricity, gas and water.

Japan -6.3% 3.8% 1.4%

Contributors to the trend � Japan’s gross domestic product grew 0.9 percent in the July-September period from the previous quarter, or at an annualized pace of 3.9 percent up from a revised 0.4 percent quarter- on- quarter and 1.8 percent annualized in the second quarter. (revised from 0.4 percent quarter- on -quarter and 1.5 percent annualized)

� The expansion accelerated in third quarter of 2010 as shoppers bought cars before government subsidies expired, air conditioners to stay cool in a hot summer, and cigarettes before a new tobacco tax kicked in. The result marks the fourth straight quarter of expansion.

� Increases in growth were experienced in the following sectors:– Shipbuilding, heavy equipment, construction machinery

– Pharmaceuticals

– Securities

� Decreases were experienced in sea transportation, semiconductor, electronic component and automobile industry.

South Korea 0.2% 6.1% 5.8%

Contributors to the trend � Real GDP increased by 6.1 percent in 2010 owing to the buoyancy of exports and the ensuing pick up in manufacturing and facilities investment; this was the highest rate of growth since the 7.2 percent in 2002.

� Increases were experienced in the following sectors:– The mining & manufacturing production growth rate registered 13.5 percent on a year-on-year

basis, suggesting a gradual moderation in economic expansion. Consumption improved gradually as continued strong exports and investment created more jobs in the manufacturing sector.


First quarter 2011


Data snapshot – GDP

Data snapshot – Inflation

Economic growth 2009 2010 Feb, 2011 Trending Contributors to the trend – The transportation and finance & insurance recorded a high growth of 10.7 percent and 6.8

percent, respectively, although some sectors including the real estate and renting and leasing services recorded a high rise (6.8 percent).

� Decreases were experienced in the following sectors:– Automobile and semiconductor sector recorded a sharp fall with the growth rate of -12.4 percent

and - 8.7 percent respectively, compared to the previous month. – Weaker Performance growth in exports will undermine related facilities investment which is

expected to sharply fall to 5.1 percent in 2011 from 23.9% in 2010.– The value of construction completed decreased by 9.5 percent, due to the poor performance of

construction and civil works, compared to the previous month (-14.7 percent).

Taiwan -1.9% 10.8% 5.5%

Contributors to the trend � Taiwan’s economy is growing faster than expected in second half of 2010 with the 2010 GDP forecast increase to 9.98 percent. Taiwan’s suite of high-tech export goods has been in high demand with shipments of information and communication equipment such as smart phones, tablet PCs, which reflected in Taiwan’s manufacturing sector with overall production rising.

� According to the TIER (Taiwan Institute of Economic Research) service sector survey, both retail and wholesale sector demands grew in October 2010 due to the improved overall economy.

� Tourist arrivals have increased by 42.11 percent over the previous month in October, which boosted overall demands in the service sector. Moreover, the stronger than expected economic recovery in Taiwan is likely to further boost domestic demands.

� Domestic demand will sustain the economy after a listless showing in recent years because of the sub-prime mortgage crisis and global financial storm. Private investment, in particular, is forecast to expand in 2011, as major firms increase purchases of capital equipment.

� Exports, which account for 70 percent of Taiwan’s GDP, are expected to grow continuously.

� Increases were experienced in Finance & Insurance and construction sector.

� Decreases were experienced in Manufacturing, Wholesale & Retail Trade and Real Estate Sector.

Economic growth 2009 2010 Feb, 2011 Trending China -0.7% 3.8% 6.0%

Contributors to the trend � Inflation (consumer price index) climbed to 4.4 percent year- on- year in October due to a surge in food prices and higher housing costs while very little inflation was apparent in other areas. Inflation may come under control due to price controls, a bumper wheat harvest, and a cooling property market.

� China’s inflation risks will remain high in the early months of this year despite the slowdown in December’s consumer price inflation. China’s consumer price index rose 4.6 percent in December, down from November’s 5.1 percent rise, which was a more than two-year high.

� Corporates are experiencing much higher inflation with the year-to-date measure for the producer price index up 11.6 percent year-on year by October and the sub-index for heavy industry up 16.4 percent year-on-year. China’s manufacturing confidence for February dropped to a seven-month low amid Beijing’s tightening policies to fight rising inflation. Purchasing managers index (PMI) of China’s manufacturing sector dropped to 51.5 for February from 54.5 in January.

� Quarterly movements pushing inflation upwards include:– Housing price – Food price– Smoking and alcohol commodities– Medical Treatment and personal commodities– Entertainment, education and culture commodities and service


First quarter 2011


Data snapshot – Inflation Economic growth 2009 2010 Feb, 2011 Trending Hong Kong 0.6% 2.4% 5.5%

Contributors to the trend � The CPI surged by 3.1% year-on-year in December 2010 (2.9 percent in November) due to the fast-rising private housing rentals, as well as the costs for meals bought away from home.

� Among the various CPI components, 13.0 percent year-on -year growth in prices were recorded for electricity, gas and water. Underlying inflationary pressures remain strong.

� Underlying inflationary pressures remain strong.

� Quarterly movements pushing inflation upwards include:– Electricity, gas and water– Food, clothing and footwear, transport, meals bought away from home– Miscellaneous goods, miscellaneous services, housing, alcoholic drinks and tobacco.

� Price reduction in durable goods resulted in downward pressure on inflation.

Japan -1.4% -0.7% 0.2%

Contributors to the trend � Year-on-year CPI inflation edged just above zero for October and November. The Yen averaged 83.4 for December, its third weaker month from a high of 81.9 last October.

� Entrenched deflation is weighing on an economy at risk of contracting this quarter after a climb in the yen to a 15-year high undermined export growth. The currency’s 11 percent advance against the dollar this year has also exacerbated price declines by lowering import costs, adding to the case for the Bank of Japan to provide more monetary stimulus

� Increases in prices of Gasoline & heating oil, tobacco and package tours to abroad pushed inflation upwards.

� Reduction in prices of foods excluding fresh foods, household durables, computer, flat television and digital camera and electricity expenses resulted in downward pressure on inflation.

South Korea 2.8% 3.0% 6.0%

Contributors to the trend � The gross real wage reflecting the CPI inflation (2.9 percent) registered 2,441,000 won, up by 4.7 percent on a year-on-year basis, continuing the growth trend for three consecutive quarters. Core inflation registered 1.8 percent, slightly down from the previous month (1.9 percent), and its month-on-month growth rate recorded 0.1 percent.

� Quarterly movements pushing inflation upwards include: – The purchase price of apartments nationwide registered a 0.5 percent growth rate on a month-on-

month basis, recording an increased growth for three consecutive months, while Cheonsei prices recorded a rise of 1.4%, continuing on with a fast rising pace.

� Areas adding downward pressure on inflation include: – The growth rate of agricultural, livestock and marine product prices decreased significantly, while

that of the service prices fell slightly mainly led by public services.

Taiwan -0.9% 1.0% 2.5%

Contributors to the trend � For the whole year of 2010, the CPI increased by 0.96 percent compared with 2009, as prices of Commodity went up 1.78 percent and Service moved up 0.31 percent. CIER (Chung-Hua Institution for Economic Research) expects consumer prices to remain stable in 2011 with the inflation level set to 1.36 percent for the year.

� Quarterly movements pushing inflation upwards include: – Fuels & Lubricants– Medicines & Health Food– Dairy Products

� Areas adding downward pressure on inflation include: – Vegetables– Garments


First quarter 2011


Data snapshot – GDPEconomic growth 2009 2010 Jan , 2011 Trending India 5.8% 10.5% 8.7%

Contributors to the trend � The Indian economy is on an upward trajectory as India’s broad-based

� growth is unlikely to fall below 8 percent year-on-year. However certain downside risks to growth remain, such as sovereign debt risks spreading from the Euro zone, strong capital inflows beyond the absorptive capacity putting pressure on the exchange rate, volatile industrial growth. Growth in core infrastructure lagging behind GDP growth as well as industrial growth and inflationary pressures.

� Increases were experienced in the following sectors:– Agriculture

– Manufacturing

– Construction

– Consumer goods

� There was no sector which saw decrease during the quarter ending December 2010

Pakistan 3.3% 4.8% 2.8%

Contributors to the trend � The real GDP growth in current quarter is likely to be around the annual target of 3.3 percent, which is higher than the 2.0 percent growth seen in last quarter. According to projections embodied in the report published by State Bank of Pakistan, real GDP growth overall in a FY10 between 2.5 percent -3.5 percent, average CPI inflation may remain between 10 percent-12 percent in first quarter in FY11. However, it was the weak fiscal performance; the fiscal deficit bounced back to 6.3 percent of GDP in last quarter of FY10, i.e., 1.1 percent higher than in the previous quarter.

� FY10 fiscal performance was characterized by continuing expansion in fiscal and quasi-fiscal operations, which crowded out and otherwise undermined private sector activities, supported the persistence of double-digit inflation, increase the total public debt and liabilities substantially from 68.7 percent of GDP in last quarter to 69.5 percent.

� Increases were experienced in the following sectors:– Agriculture (2%)

– Livestock (4.1%)

– Large Scale Manufacturing (LSM) (4.4%)

– Services sector (4.6%)

� Decreases were experienced in crops by 0.4 per cent and Fisheries by 0.9 percent

South AsiaIndia, Pakistan

Data snapshot – Inflation Economic growth 2009 2010 Jan , 2011 Trending India 11.7% 12.0% 11.0%

Contributors to the trend � Inflation resurged in December 2010 as a factor of sudden increase in primary food articles, especially vegetables and fuels. India’s central bank, the Reserve Bank of India (RBI) hiked interest rates in December in an effort to reduce the wholesale price inflation, which has been running above 8%yoy since January 2010.

� Quarterly movements pushing inflation upwards include:– Increase in primary food articles

– Increase in global crude oil prices

– Expensive Imports as a result of increase in global commodity prices

– Increase in prices of non-food primary articles and minerals


First quarter 2011


Data snapshot – Inflation Economic growth 2009 2010 Jan , 2011 Trending Pakistan 20.8% 11.7% 13.5%

Contributors to the trend � Inflationary pressures remained firm in the economy. Rising international commodity prices, domestic supply shortages of vegetables, upward adjustment in administered prices of fuel and electricity, and government’s budgetary borrowings from the central bank supporting aggregate demand were responsible for higher inflation.

� Since heavy rains and floods struck various parts of the country in August 2010, disrupting supply and creating shortages of some food commodities, food inflation remained higher contributor to overall inflation than non-food inflation in the recent months. Food inflation was more than 60 percent.

� Increases in prices of vegetables, ghee and cooking oil, sugar, and milk and meat products pushed the inflation upwards.

� Decrease in the price of non food items (Medicare, fuel and lightings) brought the inflation down during the last quarter.

AustralasiaAustralia, New Zealand

Data snapshot – GDP Economic growth 2009 2010 Jan , 2011 Trending Australia 1.4% 2.5% 3.7%

Contributors to the trend � The Australian economy remained steady with GDP increasing by 0.2 percent (in seasonally adjusted terms) from the June 2010 quarter to September 2010. This follows a movement of 1.2 percent and 0.5 percent% in June and March 2010 quarters, respectively.

� Increases were experienced in the following sectors:– Agriculture, forestry and fishing (18.5%)

– Administrative and support services (1.8%)

– Education and training (0.7%)

� Decreases were experienced in the following sectors: – Information media and telecommunications (1.4%)

– Rental, hiring and real estate services (1.3%)

– Arts and recreation services (1.2%)

New Zealand 0.1% 2.4% 2.4% –Contributors to the trend � GDP has declined slightly 0.2 percent in the September quarter. This follows a 0.1 percent increase

in June 2010 quarter. The annual GDP movement from September 2009 to September 2010 is 1.4 percent.

� The decline in economic activity this quarter follows five consecutive quarters of growth. This fall is attributed to falls in the primary and goods producing industries.

� Increases were experienced in the following sectors:- Wholesale trade (2.4 %)

- Transport and storage (3.4 %)

� Decreases were experienced in the following sectors:– Manufacturing (1.7%)

– Construction (2.5%)

– Real estate and business services (0.7%)


First quarter 2011


Data snapshot – Inflation Economic growth 2009 2010 Jan , 2011 TrendingAustralia 1.8% 2.9% 3.5%

Contributors to the trend � The inflation rate continued to rise with a quarterly movement of 0.4 percent and the annual all groups CPI movement reported at 2.7 percent, to December 2010.

� Quarterly movements pushing inflation upwards during December include: – Fruit (15.5%)

– Vegetables (11.4%)

– Domestic holiday travel and accommodation (3.8%)

– Automotive fuel (2.1%)

– House purchase (0.7%)

� Areas adding downward pressure on inflation include: – Pharmaceuticals (6.2%)

– Audio, visual and computing equipment (4.8%)

– Motor vehicle repair and servicing (1.9%)

– Deposit & loan facilities (1.3%)

– Motor vehicles (1.0%)

New Zealand 2.1% 2.3% 3.2%

Contributors to the trend � CPI rose 2.3 percent this quarter. This rise was mainly influenced by the increase in GST (goods and services tax). This increase makes it the largest increase since the September 1989 quarter, which recorded an increase of 3.5 percent. The annual increase is 4.0 percent from December 2009

� Quarterly movements pushing inflation upwards include: – Higher prices for petrol (6.8%)

– Package holidays (15.6%)

– Purchase of new housing (2.0%)

– Medical services (5.0%)

– International air transport (5.5%)

– Property maintenance services (4.4%)

� Lower prices for vegetables (by 3.3%) resulted in downward pressure on inflation

Note: GDP and Inflation data sourced from IMA Asia Jan 2011 update except for Pakistan which is sourced from IMF, Oct 2010.


First quarter 2011


Source: Various local snapshot surveys conducted in 2010

3. HR and Labor Issues

HR Issues3.1. South East Asia

Hiring intentions –Q1, 2011

South East AsiaActions Indonesia Malaysia Philippines Singapore Thailand VietnamHire talent as planned (Add head count)

59 98 51 58 - -

Hire less talent than planned - - - 7 -Reduce headcount 5 2 3 2 - -No change in headcount (Freeze hiring)

36 - 46 40 - -

Numbers mentioned in the tables indicate % of respondents to each survey. The number of participants varies across surveys.

Data Source:

ID: 2010 Indonesia September Flash Survey

MY: 2010 Mercer All Industries Survey

PH: 2010 All Industry TRS

SG: October 2010 SG Market Pulse Survey

China currently has highest rate of attrition at 16.4% in the region, based on 2010 survey results, while Malaysia and Vietnam are next with attrition rates of 16% and 14.7% respectively. Japan has the lowest rate of attrition due to declining economic activity following the global economic recession.

Chart 3 – Attrition rates in Asia Pacific Region


First quarter 2011


Salary/legislation changes

3.1.1 Malaysia

1. The new service tax rate of 6% that was proposed in the 2011 Budget has now been enforced effective 1 January 2011. The originally mooted 4% goods and services tax which was meant as part of an effort to restructure the overall tax regime and reduce over reliance on revenues from the oil and gas sector has now been postponed indefinitely to allow for further studies on the same. On retirement age, the government has now extended the civil servants’ retirement age to 58 from the current 56. Effective 1 October 2010, part time employees (defined as those whose average working hours is more than 30% but less than 70% of normal hours of work for a full time employee) is now provided for under the labour laws. The Government has also set up the National Minimum Wage Council to deliberate with all stakeholders on the plan to introduce a minimum wage system in Malaysia. Meanwhile, the Ministry of Women, Family & Community Development is pushing for the maternity leave for the private sector to be revised from the current 60 days to 90 days in order to encourage retention of women in the private sector’s labour force. This proposal is still at various stages of discussions and deliberations, notwithstanding the same have been made available to the public sector.

2. The Parliament has passed new laws requiring companies to offer re-employment to workers beyond the statutory retirement age of 62 years. W.e.f 1st Jan 2012. Re-employment need not be for the same job or on the same terms, but workers are given the option to stay on in their jobs if they are medically fit and show satisfactory performance.

3.1.2 Thailand

New Minimum Wage in Bangkok and Bangkok outskirt are now 215 baht, effective date by 1st January 2011. The lowest min. wage would be 159 baht in Phayao and the highest is 221 in Phuket.

3.2 North Asia

Hiring intentions – Q1, 2011

North AsiaActions China Hong Kong Japan Taiwan South

KoreaHire talent as planned (Add head count) - - 39 38 -Hire less talent than planned - - - 58 -Reduce headcount - - 5 4 -No change in headcount (Freeze hiring) 16 - 56 - -

Numbers mentioned in the tables indicate % of respondents to each survey. This number varies across surveys.

Source:

CN: 2011 Q1 China Monitor

JP: 2010 JP TRS

TW: 2010 TW TRS All Industries Survey (July)

Salary/legislation changes

3.2.1 China

1. China has expanded the coverage of work-related injury insurance to include public institutions, social groups, nonprofit grass-root organizations, foundations, law firms and accounting firms. The newly amended regulation, signed by Chinese Premier Wen Jiabao, also raises compensation rates for each work-related injury and covers injuries that the employees sustain when commuting.

Under the current system, the national average compensation is approximately CNY 100,000, but the lowest regional average compensation is roughly CNY 40,000. The new regulation raises the compensation to 20 times the national annual disposable income for urbanites per capita in the previous year, about CNY 340,000, according to 2009 statistics.


First quarter 2011


2. The Social Insurance Law of the People’s Republic of China was signed on 28 Oct 2010. This law applies to employers and individuals working in China, including foreigners, urban workers, urban residents and rural residents with effect from July 2011.

All citizens will have five types of coverage: state pension, basic medical insurance, unemployment insurance, maternity insurance and work injury insurance. Foreign workers will be entitled to the same coverage, but it does not seem that they will be required to participate.

Also, social insurance disputes between employers and employees will be more easily resolved under the new law, and migrant employees will have government support in transferring pension, medical and unemployment insurance between cities.

3. The Beijing Government has introduced basic medical insurance (outpatient emergency reimbursement on the same basis as inpatient reimbursement) for men over age 60 and women over age 50 that did not have Urban Employee Basic Medical Insurance before that age, certain children, and the unemployed. This medical insurance system also standardizes the government subsidy, which is RMB 460 per person per year. Effective 1st Jan 2011.

3.2.2 Hong Kong

On 10 November, the Chief Executive-in-Council adopted the recommendation of the Provisional Minimum Wage Commission to set the initial statutory minimum wage (SMW) rate at HKD 28 per hour from 1 May 2011. The concept of a minimum wage is new to Hong Kong. The Minimum Wage Ordinance, gazetted in July, aims to establish an hourly wage floor to forestall excessively low wages without causing significant loss in low-paid jobs or unduly affecting labour market flexibility, economic growth and competitiveness. Although the employer guidelines have not yet been released, employers will need to ensure that they pay the minimum wage and that their definition and recording of working time is consistent with the legislation.

3.2.3 Japan

The Amended Labor Standards Law came into effect on April 1, 2010. Overtime wages increased from the current 25 percent overtime premium pay of the normal wage to 50 percent for hours exceeding 60 per month. This is aimed to protect workers from prolonged work or death due to overwork. The law does not apply to small and medium-sized companies at this stage. This law also allows workers to take up to 5 days of annual paid leave on an hourly basis not on a daily basis under the collective agreement.

With the distribution of child-bearing allowances, one of the Democratic Party of Japan’s key campaign promises in last year’s election started in June 1, 2010. Although the payment would be expected to be JPY26, 000 per child aged 15 and younger monthly, JPY13, 000, which is the half amount of the plan, will remain for the time being

3.2.4 South Korea

2011 Insurance Contribution Revision Plan

By 2011, there will be some changes in insurance program and contribution rate according to National Health Insurance Corporation (NHIC).

At first, four national major insurances will be noticed together by NHIC. And Employment Insurance and Workmen’s Compensation Insurance have changed to monthly payment from lump sum payment.

Insurance contribution changes are applied to Health Insurance contribution rate and Long-term Care insurance contribution rate. Amount of the contributions can be increased due to raised health insurance rate.

Increase of the insurance contributions is mainly due to four factors following.

� Extension of the health protection: 8 items in total for insurance benefits (osteoporosis, diabetes mellitus, intestinal fistula, uristomy, carcinostatis substance, lung surfactant, radiotherapy, cancer operation), and increase of support for the healthcare cost to pregnancy and childbirth to 400 thousand Won

� Medical fee increase in health insurance program: average 1.64%


First quarter 2011


3.3 South East Asia


South AsiaActions India PakistanHire talent as planned (Add head count) 75 40Hire less talent than planned - 50Reduce headcount 0 4No change in headcount (Freeze hiring) 25

Numbers mentioned in the tables indicate % of respondents to each survey. This number varies across surveys.

Source:

IN: 2010 India All Industries TRS (Dec)

PK: 2010 Pakistan All Industries TRS

3.3.1 India

1. The Employees’ Provident Fund Organization (EPFO) Central Board of Trustees has announced that the interest rate for 2010-11 will be 9.5%. The rate has been 8.5% for the last five years.

2. The EPFO has decided to stop paying interest to provident fund accounts that have not had any fresh contributions for three years. However, employers that operate their own Provident Fund Trust can choose to implement this policy. This could reduce the cost of the fund to the employer.

3.3.2 Pakistan

1. The minimum wage was raised from Rs. 4600/- to Rs. 6000/-, which will be further enhanced to Rs.7000/- there are increase of about 17%.

2. The age for entitlement of old-age pension will be reduced from 55 years to 50 years in case of mine workers.

� Increase of the number of beneficiaries of the long-term care insurance: 340 thousand and 6.2% of the popu-lation of the elderly

� Increase of day and night care fee of the long-term care insurance: 1.56%

3.2.5 Taiwan

1. With effect from 1 January 2011, the ordinary insurance premium rate for labor insurance shall be raised by 0.5% to 7%. The premium shall be calculated based on the monthly insurance salary of the insured persons. The total premium charged shall be 8%, including 1% employment insurance premium. For those insured persons with an adjusted insurance salary, the Bureau of Labor shall also provide a “Detailed Calculation List of Premium with Modification in the Current Month” which shall be included in the premium payment bill for January 2011 (to be mailed during the last ten days of February, 2011)..

2. The Legislative Yuan passed the proposal for reforming the national health insurance system on 5 January 2011, and under the amended National Health Insurance (NHI) Act, individuals will pay 4.91 percent of their regular monthly salary for coverage under the program, down from the current 5.17 percent. However, those with income in the form of interest, big bonuses and other incomes will have to pay an additional 2 percent from this “extra” income to help boost the financial health of the cash-strapped health insurance program.

3. In order to deal with the problem of inadequate funding sources, the planned second-generation NHI will change the basis for calculating premiums from salary to income. The two-track premium reform is known as the “second-generation health insurance”, which backtracks from the Department of Health’s original attempt to collect premiums based on household rather than individual incomes. After the NHI amendment is passed, the Department of Health (DOH) Minister said that the new system is highly likely to be put into practice in 2012.


First quarter 2011


3. Only those unions shall be recognized who to their credit have the support, of a minimum of 15 per cent of total membership of the establishment, which they represent. The rest of the unions by default shall stand dissolved.

4. A comprehensive Social Insurance for old-age benefits and health services will be introduced on self-registration/voluntary basis to allow all workers in formal and informal sector of economy, including self employed persons, to benefit from it.

5. The registration of workers will be linked with the Smart Cards being issued by NADRA (National Database and Registration Authority). All particulars of the workers with respect to name, employment history, education, skills will be placed on the Chip of the Smart Card. This card will also serve the purpose of registration under Social Security, EOBI (Employee old-age Benefits)_ and workers Welfare Fund and will be a source of Data Bank of labour force for re-skilling of workforce with respect to enhancement of employment within the country and overseas

3.4 Australasia:


AustralasiaActions Australia New ZealandHire talent as planned (Add head count) 31 20Hire less talent than planned - -Reduce headcount 6 7No change in headcount (Freeze hiring) 63 73

Numbers mentioned in the tables indicate % of respondents to each survey. This number varies across surveys

Source:

AU: 2010 AU TRS (July)

NZ: 2010 NZ TRS (July)

Salary/Legislation changes

3.4.1 Australia

1. Under a Government initiative, fathers in Australia would be entitled to flexible work hours to care for their children.

2. The Ministry for the status women announced a campaign to reform workplace equality legislation in order to give father more flexibility with regard to working time. Currently, under the National Employment Standards, employees are entitled to parental leave encompassing maternity leave, paternity leave and adoption leave. The total maximum leave for both parents is one year. One week of unpaid paternity leave at the time of birth is available to males with 12 months’ continuous service. The Maximum extended paternity leave of 51 weeks is reduced by any maternity leave taken by the employees’ spouse.

3.4.2 New Zealand

1. During July/August 2010, a bill was introduced to Parliament that would have extended the KiwiSaver member contribution rate options to include 6% and 10% of salary. However, the final version of the bill that was passed in August did not include this change. Members of KiwiSaver schemes will continue to choose to contribute 2%, 4% or 8% of salary only.

2. The Employment Relations Amendment Act 2010 and the Holidays Amendment Act 2010 received royal assent on 26 November. Both Acts aim to provide more flexibility for employees and employers.

New provisions in the Employment Relations Act extend the availability of the 90-day trial employment period for new hires to all employers (previously only employers with fewer than 20 employees). A second significant change provides that union access to the workplace will now be conditional on employer consent.

The Holidays Amendment Act allows employees to request to cash out up to one week of annual leave each year, although no obligation is placed on employers to permit cash-out.


First quarter 2011


4. Innovation CornerSouth Korea:

Permission of plural labor unions at workplaces for breaking through social conflicts

One of Korea’s major trends in 2011 is issues involving social conflicts and fair society. Even though the Korean economy has recovered from the fallout of the global financial crisis, the unprivileged are not expected to have better job security and income distribution probably won’t improve. This will further deepen long-standing social conflicts (e.g. a divide between the rich and the poor and ideological disputes).

Social conflicts will likely become more multi-layered. In 2010, particularly, plural labor unions at workplaces are permitted in July. The popularity of Social Networking Services (SNS), which allows for instant expression of opinions to a wide audience, will make broader communication channels available. To deal with intensifying social conflicts, major policy issues for this year will include welfare for the ordinary working classes, shared growth of large and small companies and improved self-reliance for the unprivileged.

Pakistan:

Strategic Partner: HR professional has to evolve to become a strategic partner within the organization. HR should be a business driven function with a thorough understanding of the organization’s business processes, core area of expertise and to be a part of profit generating rather than a support department so HR can influence key decisions and policies.

Workplace Diversity: HR professional should encourage the innovative ideas and diversified views for their organization. Hiring employees from a diversified background will later help them to create a more open environment in which employees will be able to share their experiences and a more learning environment can prevail throughout the organization.

5. Adding Intellectual Horsepower to HRMeasuring Human Capital

Business Executives Perspective on Influence, Standardization and Governance is a dissertation study sponsored by Mercer. It was conducted by Ephraim Spehrer Patrick, a Principal in Mercer s Human Capital business in Frankfurt, in January and February 2010 with 132 participants from Germany as well as the US, Australia and other European and Middle Eastern countries. This article is a summary of the research findings.

Business leaders frequently state that people are their greatest asset – but in reality, very few of them have the evidence to back up their claim. A recent Mercer study found that while most executives believe that “human capital” (the value of people and what they produce) is very important, far fewer of them measure it or have any idea of the return on their investment.

There are a number of reasons for the discrepancy – not least the difficulty of quantifying the value of intangible assets and of coming up with a standard approach. But growing pressure in three main areas – cost control, corporate governance and sustainability – will force companies to address the issue.

The need to control costs will continue to preoccupy businesses as they strive to do more with less in uncertain post-recessionary economies. As such, they will increasingly be forced to justify spending between 21% and 60% of their total revenue on compensation and benefits, training and development, and other people-related investments, by quantifying the return.

What’s more, analysts and investors view human capital measures as important predictors of a company’s future health – not least because of the significant impact we intuitively know individuals have on customer satisfaction, productivity and revenues. Likewise, more and more questions are being asked about whether the high pay many companies award to their most senior executives correlates with superior performance, or whether it could be contributing to those organizations’ decline.


First quarter 2011


According to Mercer’s research, most business executives believe that human capital plays a key role in helping their firms achieve results and competitive advantage. More than four in five (83%) respondents think that it has a strong impact on customer satisfaction, 77% feel that it has a strong impact on productivity and 65% believe that it helps increase revenues. Yet this belief amounts to little more than an act of faith: 84% of business executives surveyed admitted to having no more than a moderate understanding of the return on human capital in their organizations.

Respondents also saw human capital as the second most important intangible asset, after customer relationships, in terms of its role in creating and sustaining competitive advantage. But while 95% agreed that intangibles should be monitored closely, nearly 60% admitted that intangible assets in their business are not measured properly.

One of the reasons human capital is not measured properly is that it is difficult to do. Inadequate data support is a factor: Human capital information is often managed on a country, division or business-unit level, when what is required is a companywide system to collate and analyze the information consistently. The technology is available to do this, but it has not been fully exploited.

Another factor is the variable ability and enthusiasm of HR professionals to measure human capital. More than half of the business executives responding to the survey believe that human capital measurement is the preserve of HR, but some of them doubt whether HR is up to the job.

And while human capital measurement could borrow from the methods applied to determine other intangibles – not least brands – a consistent approach is stymied by the significant ideological differences about how human beings and their contributions should be valued. For example, many academics and practitioners believe that qualitative measures – engagement, knowledge and skills, leadership capabilities and so on – are the most pertinent predictors of business health and sustainability, whereas the business executives who responded to the survey believe that quantitative measures, such as compensation, absence and recruitment costs, are equally relevant.

As a side note, a recent government-funded initiative in Germany – the Human Potential Index – sought to create a standard set of measurements that would allow both internal and external audiences to see which organizations were best at managing their people in order to deliver business results. But the initiative foundered because HR opinion leaders and academics believed that it was too prescriptive.

Another key finding of Mercer’s research is that most business executives are unwilling to disclose human capital information to external stakeholders, with fewer than 20% on average prepared to do so. Ironically, while they feel disclosure could undermine their competitive advantage, it might actually enhance it, because at present many research analysts don’t factor a company’s wider human capital assets into their valuations.

Mercer’s analysis of the way organizations measure their human capital has led to a number of recommendations.

1. Establish human capital measures on a company level. These should be relevant for your organization and linked to the overall business and HR strategy, but are likely to comprise a mix of qualitative and quantitative measures.

2. Once you have a set of workable measures in your organization, you could start to benchmark them against peers in your industry. Human capital measures are much more industry-specific than geography-specific.

3. Prepare yourself to report selected human capital metrics to external stakeholders, such as analysts, banks and investors, as doing so can have a positive effect on your company’s market value in the long term.

4. While business executives – the chief executive and finance director, in particular – should be involved in determining which human capital measures to use, HR should be the driver and owner of the overall process.

Establishing a human capital measurement and management discipline represents a significant opportunity for HR to be recognized as a strategic contributor to the organization. After all, as the adage goes, what gets measured gets managed, so measuring the return on investment in human capital is likely to improve the way it is managed. At that point, business leaders may say not just that their people are their greatest asset, but also that they are an appreciating asset. And they will be able to prove it, too.

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(Fo

reca

sts )

4.1

8.

8 3.

8 12

.4

8.8

2.3

5.3

3.8

14.0

6.

6 4.

5 5.

7 3.

5 5.

8 12

.3

Healt

hca

re/P

harm

a

2010

(A

ctu

al)

4.0

8.0

4.2

12.0

8.5

2.1

5.6

N.A

13.8

6.2

4.1

5.8

3.9

5.7

13.5

2011

(Fo

reca

sts)

4.7

9.

5 4.

4 12

.8

9.3

2.5

6.3

N.A

14

.7

7.4

4.5

6.1

4.0

5.9

13.0

Hi-

Tech

2010

(A

ctu

al)

1.3

7.2

3.1

10.0

7.5

2.5

5.0

2.9

10.0

6.8

3.6

4.8

3.8

7.2

11.4

2011

(Fo

reca

sts)

2.

9 8.

8 3.

5 9.

4 8.

2 2.

7 5.

7 3.

0*

10.5

6.

4 4.

1 5.

5 4.

2 6.

4 11

.5

Rem

ark

s

AU

: 201

0 fi

gu

re is

fro

m t

he

2010

AU

QSR

(D

ecem

ber

) re

po

rt a

nd

201

1/20

12 is

fro

n t

he

2010

RPR

(Se

pte

mb

er)

rep

ort

-fo

r al

l in

du

stri

es f

or

2010

. F

or

oth

ers

res

pec

tive

in

du

stry

su

rvey

s d

uri

ng

201

0 *

Fig

ure

s ar

e in

clu

sive

of

wag

e fr

eeze

.

CN

: 20

10 Q

4 &

2011

Q1

Ch

ina

Mo

nit

or

Surv

ey

HK

: HK

Mar

ket

Flas

h

Q4

, 20

10

ID :

2010

Ind

on

esia

Sep

tem

ber

Fla

sh S

urv

ey

IN:

Var

iou

s in

du

stry

su

rvey

s d

uri

ng

201

0

JP: J

P TR

S 20

10

MY:

201

0 M

erce

r TR

S Su

rvey

s

NZ:

Var

iou

s in

du

stry

su

rvey

s d

uri

ng

201

0. 2

011

fore

cast

fo

r H

itec

h in

clu

des

sal

ary

free

ze.

PH: 2

010

All

Ind

ust

ry T

RS

PK: M

erce

r TR

S 20

10

SK: 2

010

KR

TR

S A

ll In

du

stri

es S

urv

ey N

on

-Exe

cuti

ve P

rem

ium

SG: O

ct 2

010

SG M

arke

t Pu

lse

Surv

ey

TW:2

010

TW T

RS

All

Ind

ust

ries

Su

rvey

(Ju

ly 2

010)

/201

1 1H

Tai

wan

Hi-

tech

TR

D S

urv

ey (

No

v 20

10)

TH: 2

010

TRS

All

Ind

ust

ries

VN

: Vie

tnam

To

tal R

emu

ner

atio

n S

urv

ey (

TRS)

Rep

ort

201

0

N.A

. D

ata

no

t av

aila

ble

.

Dis

claim

er:

Th

e an

alys

is a

nd

fo

reca

sts

are

sub

ject

to

ch

ang

e w

ith

ou

t n

oti

ce. I

t is

imp

ort

ant

for

dec

isio

n m

aker

s to

tra

ck e

con

om

ic

ind

icat

ors

an

d m

arke

t se

nti

men

t an

d a

dju

st p

lan

s ac

cord

ing

ly a

s / i

f re

qu

ired

. Mer

cer

do

es n

ot

acce

pt

any

liab

ility

ari

sin

g f

rom

th

e

use

of

this

rep

ort

.

Asia Pacific Monitor Bulletin - imercer › uploads › Asia › pdfs › apm_q1_2011... · 2011-03-24 · Asia Pacific Monitor Bulletin First quarter 2011 4 Asia Pacific Monitor

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