August 17, 2023
Cheryl Goh, Product Marketing Manager
From the pulsating heart of Tokyo to the bustling markets of Bangkok, Asia thrives in diversity. This diversity is not confined to landscapes and traditions but also reflects in fascinating work and compensation cultures. Come, let's explore the intriguing nuances of compensation across various Asian countries.
In Japan, the dedicated 'Salaryman' is an integral part of societal imagery. Traditional Japanese companies have been known to hire fresh graduates, nurturing and retaining them until retirement. This led to a distinct seniority-based pay system. However, modern times are witnessing a shift as companies transition towards merit-based pay. This change offers a fresh perspective to employees, encouraging them to perform better and improve their skill sets for enhanced remuneration.
South Korea is renowned for its commitment to hard work and dedication. Mirroring this ethos, South Korean laws mandate companies to provide a "Severance Pay" to employees who have worked for a minimum of one year. This amount, typically equivalent to a month's salary for each year of service, pays tribute to employee loyalty and service.
Taiwanese employees eagerly await the Lunar New Year for a special reason. Many companies generously provide a year-end bonus, often equivalent to one or two months of salary. Additionally, companies are legally bound to distribute an "Employee Bonus" biannually. This practice directly ties employee rewards to company profits, fostering a sense of ownership and participation.
Hong Kong, a vibrant business hub, holds onto the tradition of offering a "Double Pay" or 13th-month salary. This, coupled with the Mandatory Provident Fund (MPF) scheme that secures retirement benefits, balances traditional practices with modern employment needs.
In the dynamic city of Singapore, employees often receive an additional "13th-month bonus", known as the Annual Wage Supplement (AWS). This variable payment, agreed upon between employers and employees, adds an element of surprise and excitement to regular earnings.
Indonesia, a country rich in religious diversity, has an interesting facet to its compensation culture. As per Indonesian labor laws, employers must provide a "religious holiday allowance" (Tunjangan Hari Raya) to employees. This is essentially a thirteenth-month salary disbursed a week before each employee's respective religious holiday, underlining a beautiful blend of faith and remuneration.
In Malaysia, compensation structures echo the country's multicultural ethos. Mandatory contributions to the Employees Provident Fund (EPF) ensure employees' retirement security. Performance-based variable bonuses add a competitive edge, while some employers provide a Cost of Living Allowance to offset rising living expenses.
Both Thailand and the Philippines follow the practice of a 13th-month salary. However, while it is a common practice in Thailand, in the Philippines, it is a legal mandate. This rule highlights the country's dedicated commitment to employee welfare.
In Vietnam, companies honor the Lunar New Year, or "Tết", with an employee bonus, often equivalent to one or two months' salary. This annual practice underscores the unique blend of culture and compensation in the Vietnamese corporate world.
From Japan's evolving Salaryman culture to Vietnam's Tết bonus, the compensation landscape across Asia is diverse and fascinating. Each country adds its unique flavor to this mix, showcasing how tradition, law, and cultural influences shape compensation practices. As Asia continues to grow and evolve, so will its intriguing work and compensation cultures, painting a vibrant picture of employee rewards and recognition.
How is Japan transitioning from a seniority-based pay system?
With changing times, many Japanese companies are moving from a seniority-based pay system to merit-based pay, encouraging employees to improve their skills and performance for better remuneration.
What is unique about South Korea's compensation culture?
South Korea showcases a deep commitment to employee welfare with its "Severance Pay" law. Employees who have worked for a minimum of one year are entitled to this pay, equivalent to a month's salary for each year of service.
How is employee compensation linked to company profits in Taiwan?
A: In Taiwan, companies are legally bound to distribute an "Employee Bonus" twice a year, directly linking employee rewards with company profits.
How does Indonesia blend faith with compensation?
Indonesian labor laws mandate employers to provide a "religious holiday allowance" (Tunjangan Hari Raya) to all employees. This is essentially a thirteenth-month salary paid before each employee's respective religious holiday.
What is the "13th-month salary" practice in Thailand and the Philippines?
Both Thailand and the Philippines practice providing a 13th-month salary to employees. While it's a common practice in Thailand, it's a legal mandate in the Philippines, underscoring their commitment to employee welfare.