SALARIES are set to rise 4.4 per cent this year as employers seek to attract and retain workers amid a talent crunch, according to a survey out yesterday.

This is slightly more than the 4.3 per cent increase last year, after taking into account inflation.

It is also in line with the Asia-Pacific region, where pay is tipped to rise by 4.3 per cent compared with 3.3 per cent last year.

China is expected to reap the highest increase, at 7.4 per cent, while Hong Kong will see the smallest, at only 1.3 per cent.

The survey was compiled by global professional services firm Towers Watson in February, with about 2,000 responses from companies across 19 Asian-Pacific economies.

It included a range of industry sectors and job grades from factory shop floor to executive suite.

Mr Sambhav Rakyan, data services practice leader for Asia-Pacific at Towers Watson, noted that the salary increases in the region, particularly in Singapore, will be boosted by low inflation.

"The Singapore Government has been sticking to a tight monetary policy to keep the lid on inflation," he said.

"Its policy to stabilise property prices has also helped curb inflationary pressures."

The salary increases spell "good news" for employees in the region as a whole, who are "finally seeing the results of the postfinancial crisis pick-up in economic growth and in receiving more cash in hand", he said.

About 80 per cent of the survey respondents said they will hire new employees this year, suggesting "a sunny outlook for employees in the region".

But the "greatest rewards", Mr Rakyan said, will likely go to the top performers in a company, who are seeing salary increases of about 1.5 times those of average performers.

Similarly, almost 80 of the respondents said they plan to allocate a larger portion of their budget to their top performers.

"In the current war for talent, creating a strong linkage between pay and performance is critical if employers want to retain high-performing employees," he said.

"The aggressive pay increases for high performers shows how urgently companies... are focused on recruiting and retaining top talent. Given the talent shortage is becoming more acute, companies are carefully evaluating their spending."