H E A L T H W E A L T H C A R E E R

G L O B A L M O B I L I T Y T R E N D S I N A S I A

March 2017

Mario Ferraro Global Mobility Practice Leader Asia , Middle East, Africa & Turkey Mercer

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I N T R O D U C T I O N

Mario Ferraro Regional Practice Leader, Global Mobility Asia, Middle East, Africa & Turkey Mercer

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S T R A T E G I E S F O R F I L L I N G T A L E N T G A P I N A S I A

Source: Future of Jobs Report, World Economic Forum

ASEAN India China Japan UK France Germany

Support mobility and job rotation 54% 48% 36% 34% 38% 25% 30%

Attract foreign talent 46% 12% 11% 23% 17% 25% 30%

Invest in reskilling current employees 31% 48% 48% 54% 48% 33% 56%

Hire more short-term workers 31% --- --- 9% 5% --- ---

Collaborate with educational institutions 23% 28% 18% --- 17% 25% 22%

Target female talent 15% --- 20% 23% 36% 25% 19%

Target minorities’ talent 8% 12% --- --- 12% --- 19%

Collaborate, other companies in same industry 8% --- --- 11% --- 8% 15%

Collaborate, companies across industries --- 8% 11% 14% --- 33% ---

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A D O P T I N G A L T E R N A T I V E A P P R O A C H E S T O F I L L T A L E N T G A P

Source: Alternative International Assignments Policies and Practices Survey (AIA)

(N = 301)

SHORT-TERM LONG-TERM PERMANENT TALENT DEVELOPMENT

INTRA REGIONAL

COMMUTERS

89% 76% 59% 50% 46% 88% 31%

GLOBAL NOMADS

(N = 55)

86% 67% 51% 46% 36% 82% 33%

A P A C

A L L R E S P O N D E N T S

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China

Hong Kong

India

Indonesia

Malaysia

Philippines

Thailand

-7%

0%

-57%

-57%

-49%

-41%

-46%

Source: Mercer Total Remuneration Survey (2016)

Vietnam -54%

T A R G E T B A S E C O M P E N S A T I O N F O R F U N C T I O N H E A D A P A C S A L A R Y D I F F E R E N T I A L S

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37%

57%

9%

6%

ALL RESPONDENTS

(N=109)

18%

55%

66%

29%

47%

50% APAC N = 38

E S T A B L I S H I N G T H E B A S E S A L A R Y F O R F O R E I G N E R S O N A L O C A L P L U S A P P R O A C H

According to the local pay structure only (without

adjustment)

According to the local pay structure with

premium/adjustment

Case by case

Primarily through local HR/Management guidance

Direct conversion of home salary to host currency using latest

exchange rate

Depends on assignment type 3% 29%

Source: Mercer 2016 Local-plus and Location Specific Survey

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C O M M O N P A Y A P P R O A C H E S I N C H I N A

6%

25%

29%

45%

71%

21%

Local policy - (Local salary + Local benefits)

Local plus policy - (Local salary + Premium benefits)

Local plus policy - (Premium salary + Premium benefits)

Locally Hired Foreigner

Locally Hired Returnee

* Other approaches include global policy, intra-regional policy and local plus policy (Premium salary + Local benefits)

Source: 2016 Mercer TRS for LHF/Returnee

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S T A Y T U N E D …

China

Taiwan

Hong Kong

Singapore

Middle East

South Africa

Turkey

India

Mercer Mobility Forums Asia, Middle East, Africa &

Turkey

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9 © MERCER 2017

AP P E NDI X : ADDI T I O NAL I NS I G HTS

10 © MERCER 2017

REGIONAL OVERVIEW

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W H A T I S A S I A ? - G E O G R A P H I C D E F I N I T I O N

• World’s largest and most populous continent

• 48 UN member states (+6 non UN states)

Region Population (2017) % Yearly Change Net Change Area (Km²) Fert. Rate Med. Age Asia 4,478,315,164 59.60% 0.95% 42,090,691 31,034,755 2.2 30 Africa 1,246,504,865 16.60% 2.50% 30,375,050 29,678,687 4.71 19 Europe 739,207,742 9.80% 0.05% 358,740 22,131,968 1.6 42 Latin America and the Caribbean 647,565,336 8.60% 1.02% 6,536,030 20,110,725 2.15 29 Northern America 363,224,006 4.80% 0.75% 2,694,682 18,626,872 1.86 38 Oceania 40,467,040 0.5 1.42% 565,685 8,430,633 2.42 33

Source: Worldometer

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W H A T I S A S I A ? – B U S I N E S S D E F I N I T I O N

… However, many organizations have a different definition of “Asia”

EMEA ASIA

APAC

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A S I A A S A N E C O N O M Y H A S T R E M E N D O U S P O T E N T I A L B E C A U S E …

ASIA

By 2050, Asia will account for 45% of the

world population From 2000 – 2010, incomes rose on average by 96% Rapid emergence of a new Middle-Class of consumers

The region has been resilient through the global financial crisis and has experienced consistent average annual

GDP growth rates between 5% to 8%

This will add 1 billion new consumers and a total purchasing power in excess of $10 trillion

Asia will house one of the youngest and largest

workforces, numbering around 3 billion and representing 52% of the global workforce

9 of the 10 fastest growing mega-cities in the world are in Asia

The ASEAN Economic Community (AEC)

launched in 2015

Source: Forbes 2014

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A S E A N ( A S S O C I A T I O N O F S O U T H - E A S T A S I A N N A T I O N S )

Core idea Free movement of goods, services, investment, labor and freer flow of capital.

• Facilitate movement of skilled and professional labor in cross border trade • Enhance movement of students • Harmonize qualifications

A S E A N E C O N O M I C C O M M U N I T Y ( A E C ) W H A T W I L L B E T H E I M P A C T ?

14Million Additional jobs in ASEAN by

2025:

Source: International Labour Organization (ILO) and Asian Development Bank (ADB). 2014. ASEAN Community 2015: Managing Integration for Better Jobs and Shared Prosperity.

IF ASEAN WERE A COUNTRY

GROWTH by job families • Sales and Related • Management • Business, Legal and Financial

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A H I G H L Y D I V E R S E R E G I O N

Cost of Living: Hong Kong = 2nd

• Kolkata, India =194th

Quality of Living: Singapore = 26th • Dhaka, Bangladesh = 211th

• Yangon, Myanmar – 201st

Income Tax: Japan = 55.95% China = 45%

• Brunei = 0%

• Mongolia = 10%

• Macau = 12%

• Hong Kong = 15%

• Inflation ranging from 1% to 30% • 80 Languages • Intense competition for talent, leading to wage inflation

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C H I N A H I G H L I G H T S – O V E R S E A S E X P A N S I O N “One Belt and One Road” • Launched in September and October 2013 by Chinese leader

Xi Jinping.

• The Silk Road Economic Belt and the 21st-century Maritime Silk Road, also known as One Belt, One Road.

• A development strategy and framework aimed at connectivity and cooperation between China and the rest of Eurasia, consisting of two main components:

Land-based "Silk Road Economic Belt" (SREB)

"Maritime Silk Road" (MSR).

• The strategy underlines China's push to take a bigger role in global affairs, and its need for meet market demands in many areas, primarily steel manufacturing.

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C H I N A H I G H L I G H T S – C O M P E T I T I O N F O R T A L E N T

Beijing facilitates permanent residence of foreign talent Beijing Public Security Bureau, implemented 20 new immigration policies have been implemented starting March 1, 2016. High-level foreign talent will enjoy a simpler application process for visas, immigration and permanent residence in Beijing.

The “Thousand Talents Program” This is a talent recruitment program established by the Government of China in 2008, to attract high level technical experts and scientists to work in China. Preferential policies and treatments include: • Enabling working conditions; • Special living benefits: high pay and visa

privileges

1 2

“Criteria for the identification of foreign high-level talents in Beijing ”

On April 25th 2016, Beijing issued an Article announcing a strategic Talent Management initiative, which has been a great success in attracting overseas high level talent.

18 © MERCER 2017

KE Y T RE NDS I N E X PATRI ATE CO MP E NS ATI O N

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I N C E N T I V E A L L O W A N C E

DO YOU PAY AN INCENTIVE PREMIUM TO YOUR TYPICAL LONG-TERM ASSIGNEES?

63%

75%

32%

22%

5%

3%

WORLDWIDE

ASIA-PACIFIC

Ongoing Lump-sum Other

WHAT TYPE OF INCENTIVE PREMIUM DO YOU PROVIDE?

57%

43%

67%

33%

No

YesAsia-Pacific

Source: 2015 Worldwide International Assignment policies & Practices Survey

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H O U S I N G DO YOU REQUIRE A CONTRIBUTION FROM THE ASSIGNEE TO HOUSING COSTS (DEDUCT A HOME HOUSING NORM)?

40%

61%

Yes

No, we offer free housing

ON WHICH EMPLOYEE VARIABLES IS THE HOST HOUSING ALLOWANCE /BUDGET BASED?

3%

3%

23%

24%

46%

Other

It is a fixed amount (same for all assignees)

Family size

Income/position level

Family size and income/position level

Source: 2015 Worldwide International Assignment policies & Practices Survey

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T R A N S P O R T A T I O N

49%

25%

15%

13%

9%

8%

6%

0%20%40%60%W O R L D W I D E ( N = 8 0 7 )

47%

31%

11%

7%

13%

9%

5%

0% 20% 40% 60%AS I A- PAC I F I C ( N = 1 6 6 )

I T D E P E N D S O N T H E H O S T -C O U N T R Y C A R P O L I C Y

I T D E P E N D S O N T H E P O S I T I O N L E V E L O F T H E E M P L O Y E E

Y E S , T O AL L AS S I G N E E S

I T D E P E N D S O N T H E H O M E -C O U N T R Y C A R P O L I C Y

O T H E R

C A S E B Y C AS E

N O

DO YOU PROVIDE A COMPANY CAR BENEFIT/ALLOWANCE TO YOUR ASSIGNEES?

Source: 2015 Worldwide International Assignment policies & Practices Survey

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S P O U S E S U P P O R T

47%

37%

9%

5%

2%

0%10%20%30%40%50%60%

W O R L D W I D E ( N = 7 7 3 )

64%

23%

8%

3%

3%

0% 10% 20% 30% 40% 50% 60%

APAC ( N = 1 5 7 )

W E D O N ’ T H A V E A P O L I C Y N O R D O W E S U P P O R T T H E

I S S U E

W E H AV E A C O R P O R A T E P O L I C Y T H AT P R O V I D E S

G U I D E L I N E S

W E D O N O T H A V E A P O L I C Y AN D H A N D L E I S S U E S C AS E

B Y C A S E

O T H E R

W E D O N O T H A V E A P O L I C Y , B U T AR E D E V E L O P I N G O R

P L A N N I N G T O D E V E L O P O N E

DO YOU HAVE A WRITTEN POLICY ON SPOUSE/PARTNER SUPPORT FOR YOUR TYPICAL LONG-TERM ASSIGNEES?

Source: 2015 Worldwide International Assignment policies & Practices Survey

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L O C A T I O N A L L O W A N C E ( H A R D S H I P )

DO YOU PROVIDE HARDSHIP PREMIUM WHEN APPLICABLE?

58%

12%

30%

Yes No Not applicable

DO YOU CAP OR LIMIT THE AMOUNT PAID AS A HARDSHIP PREMIUM?

22%

78%

Yes

Source: 2015 Worldwide International Assignment policies & Practices Survey

24 © MERCER 2017

LOCAL-PLUS TRENDS

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R I S E I N L O C A L - P L U S P R A C T I C E S , B U T …

Location Ease of Localization Location Ease of Localization

Hong Kong Jakarta

Singapore China – 2nd and 3rd tier locations

Japan India

Korea Vietnam

Shanghai, Beijing Myanmar

Kuala Lumpur Brunei

Bangkok Cambodia

Manila Laos

Ease of localization is also highly dependent on home-host country combination

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I N W H I C H C O U N T R I E S D O Y O U H A V E T H E H I G H E S T N U M B E R O F A S S I G N E E S O N A L O C A L O R L O C A L P L U S A P P R O A C H ?

Source: 2016 Local Plus and Location-Specific policies and practices survey

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46%

35%

16%

30%

32%

32%

44%

37%

37%

37%

29%

35%

APAC

2016 (N=37)

2013 (N=52)

T Y P I C A L C A S E S W H E R E A L O C A L P L U S A P P R O A C H I S U S E D – C O M P A R I S O N A G A I N S T 2 0 1 3

F O R P E R M A N E N T / O N E W AY ( O P E N - E N D E D ) T R AN S F E R S

F O R I N T E R N A T I O N A L L Y H I R E D F O R E I G N E R S

AF T E R A M AX I M U M D U R AT I O N O N AN E X P AT R I A T E P A C K A G E ( L O C A L I Z A T I O N )

I N C E R T AI N AS S I G N M E N T L O C AT I O N S

F O R L O C A L L Y H I R E D F O R E I G N E R S

F O R C E R T AI N P O S I T I O N L E V E L S

Source: 2016 Local Plus and Location-Specific policies and practices survey

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W H A T I S T H E “ P L U S ” I N “ L O C A L - P L U S ” ?

T AX F I L I N G AS S I S T A N C E

H O S T H O U S I N G

C H I L D R E N E D U C A T I O N

T AX B R I E F I N G AS S I S T A N C E

M E D I C A L B E N E F I T

H O M E L E AV E

7 3 %

7 0 %

6 8 %

6 4 %

5 5 %

5 1 %

5 8 %

7 9 %

6 3 %

3 7 %

6 3 %

5 8 %

Source: 2016 Local Plus and Location-Specific policies and practices survey

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O N G O I N G V S . O N E - T I M E A L L O W A N C E / A S S I S T A N C E – A L L R E S P O N D E N T S R E S U L T S

O N E - T I M E O N G O I N G

H o s t H o u s i n g 8 4 %

H o m e L e a v e 7 2 %

T a x F i l i n g 4 2 %

T a x B r i e f i n g 7 3 %

M e d i c a l B e n e f i t 9 1 %

E d u c a t i o n 8 7 %

T a x F i l i n g 4 6 %

+ R E L O C A T I O N I T E M S

Source: 2016 Local Plus and Location-Specific policies and practices survey

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W H A T I S T H E “ L O C A L ” I N “ L O C A L - P L U S ” ? China (N=427)

Comp 1

Comp2

Staff (276) -44% -32%

Prof (76) -14% 5%

Mgmt (64) -12% 2%

TopMgmt(11) -26% -11%

India (N=1262)

Comp 1 Comp 2

Staff (225) -42% -27%

Prof (406) -14% -9%

Mgmt (578) -53% -55%

TopMgmt(53) -45% -33%

Malaysia (N=446)

Comp1 Comp2

Staff (275) -36% -29% Prof (107) -29% -30% Mgmt (49) -25% -21%

TopMgmt(15) -50% -34%

Thailand (N=28)

Comp 1 Comp 2

Staff (2) -- --

Prof (8) 32% 59%

Mgmt (14) 0% 26%

TopMgmt (4) -- --

Indonesia (N=46)

Comp 1 Comp 2

Staff (4) -- --

Prof (16) 14% 42%

Mgmt (25) -1% 6%

TopMgmt(1) -- --

Australia (N=163)

Comp1 Comp 2

Staff (1) -- --

Prof (34) 90% 150%

Mgmt (85) 28% 49%

TopMgmt(43) -22% -16%

USA (N=74)

Comp1 Comp2

Staff (0) -- --

Prof (14) 116% 147%

Mgmt (39) 33% 54%

TopMgmt(21) -37% -26%

Philippines (N=271)

Comp 1

Comp 2

Staff (132) -22% -10%

Prof (89) -41% -34%

Mgmt (39) -19% 13%

TopMgmt(11) -48% -37%

AS

IA

AS

EA

N

OTH

ER

Hiring Country

Singapore

Comp1 = Base Salary Comp 2 = Base Salary + Allowances

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C O M M O N P A Y A P P R O A C H E S I N C H I N A

6%

25%

29%

45%

71%

21%

Local policy - (Local salary + Local benefits)

Local plus policy - (Local salary + Premium benefits)

Local plus policy - (Premium salary + Premium benefits)

Locally Hired Foreigner

Locally Hired Returnee

* Other approaches include global policy, intra-regional policy and local plus policy (Premium salary + Local benefits)

Source: 2016 Mercer TRS for LHF/Returnee

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8,360 20,635 44,986

123,926

7,895 22,832 56,528

151,644

0

50,000

100,000

150,000

200,000

Para-professional Professional Management Executive

MY Annual Base Salary

Local Foreigners on Local Plus

25,666 54,047 103,425

237,297

26,057 56,706

111,507

265,679

0

100,000

200,000

300,000

Para-professional Professional Management Executive

SG Annual Base Salary

Local Foreigners on Local Plus

L O C A L P L U S A N A L Y S I S C O M P A R I S O N O F B A S E S A L A R I E S F O R L O C A L V S L O C A L P L U S A C R O S S J O B L E V E L S

(USD)

27,591 58,067

111,063

254,651

63,164 115,970

251,365

0

100,000

200,000

300,000

Para-professional Professional Management Executive

HK Annual Base Salary

Local Foreigners on Local Plus

*Based on regressed data

(USD) (USD)

LE

GE

ND

Little or no difference between Local and Local+ Local+ significantly higher than Local Local+ is lower than Local

Singapore: Overall the difference in salary ranges between 1%-8%. For Executive group it is about 12%.

Malaysia: Foreigners on Local Plus are generally paid significantly higher amounts of Annual Base Salary as compared to Local

employees (10% to 25% higher). The exception is para-professional level, where the salary is about 5 % lower for the foreigners.

Hong Kong: Overall the difference in salary ranges between 4%-9%.

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L O C A L P L U S A N A L Y S I S C O M P A R I S O N O F S A L A R I E S + A L L O W A N C E S F O R L O C A L V S L O C A L P L U S A C R O S S J O B L E V E L S

9,421 23,916 53,337

151,778

9,921 29,141 73,049

198,860

050,000

100,000150,000200,000

MY Annual Total Cash Comp

Local Foreigners on Local Plus

29,072 63,287 124,481

296,697

32,202 74,749 154,987

397,698

0100,000200,000300,000400,000

SG Annual Total Cash Comp

Local Foreigners on Local Plus

30,170 66,631

132,624

321,383

86,057

167,329

392,498

0

100,000

200,000

300,000

400,000

Para-professional Professional Management Executive

HK Annual Total Cash Comp

Local Foreigners on Local Plus

*Based on regressed data

Source: Mercer Total Remuneration Survey (2016)

(USD)

(USD)

(USD)

LE

GE

ND

Little or no difference between Local and Local+ Local+ significantly higher than Local Local+ is lower than Local

Singapore: When allowances are added, the overall difference is 11%-25%. For Executive group it is higher, and is recorded at 34%. Malaysia: Foreigners on Local Plus are paid significantly higher as compared to Local employees (22% to 37% higher). The exception is para-professional level, where the compensation is only about 5

% higher for the foreigners. Hong Kong: Overall the difference between the compensation for local employees and foreigners on local plus packages is 22-29%.

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76%

9%

9%

4%

ALL RESPONDENTS

(N=110)

58%

18%

13%

5%

APAC N = 38

Per local country

Depends on location

Best of home and host locations

It depends on the assignment type

Case by case 3% 5%

H O W D O Y O U H A N D L E S T A T U T O R Y B E N E F I T S ?

35

B E N E F I T S P R O V I D E D T O A S S I G N E E S O N L O C A L P L U S A P P R O A C H

9%

16%

26%

37%

2%

3%

3%

44%

34%

38%

32%

45%

38%

60%

45%

ALL RESPONDENTS(N=110)

APAC (N=38)

ALL RESPONDENTS(N=110)

APAC (N=38)

ALL RESPONDENTS(N=109)

APAC (N=37)

ALL RESPONDENTS(N=110)

APAC (N=38)

NO PLAN FOR LOCAL PLUS ENROLLED IN THE LOCAL PLAN

P E N S I O N P L A N

S AV I N G S P L AN

H E A L T H I N S U R A N C E

D E AT H A N D D I S A B I L I T Y

B E N E F I T