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Introduction

Even as the Asia-Pacific region continues to expand economically, the area is seeing important changes. The “Asian tigers” of South Korea, Taiwan, Hong Kong, and Singapore are close to being fully developed economies. Other countries like Indonesia and the Philippines are still growing, but face a long-term challenge in the economic rise of China. While Western companies confront these issues, they must also tackle varying human resources opportunities and changes across the region. This article discusses notable Asian HR developments that occurred in 2007 outside of Japan, China, and India.

Regulatory issues

In more advanced countries like Taiwan and South Korea, government regulations have a significant impact on compensation practices. In July 2007, Taiwan raised its minimum hourly wage by 44% to $2.88, and its national minimum monthly wage by around 9% to $523.64. This was the first increase since 1997, and was expected to affect around 1.4 million low-income workers. Analysts noted that in addition to the increase, businesses were predicted to pay 11% more in total compensation in 2007 than in 2006. This overall increase is chiefly due to scheduled increases in premiums for social programs.

In January 2007, South Korea’s Ministry of Health and Welfare announced that health insurance premiums were to rise by 6.5%, more than twice their average increase over the previous two years. The change is to help offset mounting budget deficits in the national health program. Previously, employers and employees both paid about 2.2% of monthly salary into the insurance fund. Korea is aging rapidly, with the birth rate hitting an all-time low of 1.08 children per woman in 2005, even lower than the corresponding figure for Japan. As a result, more and more health care spending in Korea is being concentrated on the elderly.

In Vietnam, on the other hand, while many labor regulations are weakly enforced, foreign companies must contend with other regulatory issues. For example, a current Vietnamese law allows only 3% of any company’s employees to be foreign nationals. However, in October 2007, the Ministry of Labor, War Invalids and Social Affairs (MOLISA) announced that it intended to remove this cap by the end of the year. The new regulation will put no limit on the number of foreigners that can be hired by individual companies. Both domestic and foreign Vietnamese companies are making substantial use of skilled professionals from abroad. According to MOLISA, the number of work permits issued to foreigners rose by almost 70% between 2005 and 2006.

Labor market issues

The availability and cost of labor in Asia varies depending on factors like population and economic development. In some countries, like Vietnam, cheap labor is abundant; in others, like the small city-state of Singapore, this is not the case. However, short supply of top talent is common to all of the countries in the region. Care must be taken to attract and retain good employees.

Salaries in Singapore were predicted to rise by 4.3% in 2007, compared to 3.9% in 2006. Economic growth and job creation in Singapore have both been strong in recent years, but employee turnover is also on the rise. Job-hopping has become more common among skilled Singaporeans. Poor prospects for advancement and unsatisfactory relationships with supervisors have been cited as top reasons for changing jobs. To improve employee retention, many companies have turned to flexible employee benefits programs, including lifestyle-related perks such as health club memberships and childcare subsidies. The Singaporean government has also initiated a scheme to subsidize keeping employees in the workplace past the retirement age of 62.

In Vietnam, HR analysts estimating that the talent pool is only able to satisfy 30 to 40% of current market demand. Top-notch employees, especially in management, sales, marketing, IT services, accounting, and finance, have seen their salaries rise by 15 to 20% over the last few years. To help meet the demand, companies are working to attract some of the estimated 3 million overseas Vietnamese (“Viet Kieu”) back to Vietnam, to apply their Western education and work experience.

Korea continues to suffer from organized labor issues at a level rarely seen elsewhere in Asia. Hyundai, a major automotive manufacturer, typically raises wages by 8 to 10% annually, but still has had strikes almost every year since 1987. Foreign companies, including General Motors and Carrefour, have also experienced costly labor strikes in recent years. Continued disruptions may seriously hurt Korea’s prospects of becoming an Asian regional hub. Air freight companies like FedEx and DHL have passed Korea over as a hub in favor of China, partly for this reason.

Discrimination issues and women in the workplace

HR managers at Western companies in Asia must be able to deal with traditional attitudes about women in the workplace. In Korea, for example, a recent survey found that one out of ten job advertisements mentioned conditions irrelevant to work performance, such as women’s marital status, appearance, height, or other physical requirements. Although Korea passed an Equal Employment Opportunity Act in 1998, male workers still receive higher wages than women for similar work. Women in many Asian countries are often reluctant to speak out about discrimination or sexual harassment. However, women also frequently make up a valuable human resource pool, and many foreign firms are trying to make female-friendlier workplaces to attract them. Some have instituted flexible working hours and childcare benefits to keep women in the workplace after they have children.

One exception to common Asian attitudes about women is the Philippines, where women have a traditionally powerful role in society. According to a Grant Thornton survey conducted in 2007, 50% of people holding senior management positions in the Philippines were women, compared to a global average of 22%. About one fifth of working women in the Philippines have completed college, compared to only one tenth of working men. Although salaries for mid-level managers are still higher among men than women in the Philippines, the salary gap is quite narrow at senior management levels.

HR managers should also be aware of the cases where traditional treatment of women in the workplace is changing. In the legal arena, Taiwan has progressed beyond merely prohibiting gender discrimination. In July 2007, Taiwanese lawmakers passed a bill making it illegal for employers to specify age restrictions in recruitment advertising. The bill also made it clear that employers cannot discriminate against employees based on their sexual orientation or place of birth. The move is partly in response to a government panel that had called for an increase in the participation of the middle-aged and elderly in the workforce. The panel called for the elimination of barriers to employment for these groups.

Conclusion

The smaller countries of East and Southeast Asia are going through different HR transitions depending on their local economic characteristics as well as regional and global changes. Western companies should be knowledgeable about such changes in the region to make full use of opportunities and minimize potential problems.

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