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Vol.11 2010.1
COMPENSATION & BENEFIT PRACTICE

IT is the most affected, and pharmacy is the least affected in wage adjustment during depression

Impacted by the global financial crisis and bankrupt of Lehman Brothers, the average ratio of wage adjustment in Taiwan has dropped dramatically, from 3-4% to a ratio even smaller than 1%. According to a survey about bonus market by Watson Wyatt in 2009, IT industry had the biggest impact, only 0.2% of wage adjustment. While in pharmacy, which affected less by business cycle, although declined a little compared with last year, still ranked number one about rate of wage adjustment in all industries.

The average ratio of wage adjustment in 2009 is 0.7%, the smallest wage adjustment in the last eight years. Consumer industry, always with smaller wage adjustment in the past, surprisingly has 1.8% of wage adjustment last year, which more than that of IT and financial industry. The reason of this phenomenon is that, although during depression, people still spend money on livelihood. But what people buy has shifted from high-priced products to low-priced products, a phenomenon that could be proven by depression of worldwide luxury.

Charles Wang, general manager of Watson Wyatt, pointed out that in addition to depression, another reason of the decrease of wage adjustment ratio in IT industry is that many companies increased their base pay in 2008 in response to the issue of bonus expense in 2007. That is to say, the wage adjustment ratio in 2008 had an abnormal increase due to the structural change in many company, and this abnormal increase makes the wage adjustment difference between 2008 and 2009 larger, up to 5.4%.

Moreover, people tend to have less intention to change their jobs during depression except for pharmacy industry, in which the ratio of voluntary turnover rose 1%(10%→11%) while the ratio of volunteer turnover in other industries fell from 2008 to 2009. This shows that pharmacy is the least affected industry in the depression.

"Although voluntary turnover rate will fall during depression, people with talent and high potential are still very popular. Companies extremely need those potential employees to deal with obstacles in bad years. Consequently, what enterprisers concern most is how to attract talent people."Wang said "Divergence of bonus distribution may be helpful in inspiring talent people."

(Source: Watson Wyatt Taiwan. This is an informal translation from Chinese. For official content, please refer to the original version from Watson Wyatt Taiwan.)

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