Research from Aon outlines the areas of Southeast Asia that are prime for compensation increases.
By Maggie Mancini
Aon’s 2023 Salary Increase and Turnover Report for Southeast Asia finds that salaries in the region are expected to increase in 2024. While salaries in Singapore and Malaysia are expected to stay flat at 4% and 5% respectively, the survey finds that the median salary is expected to increase 6.5% in Indonesia, 5.5% in Philippines, 4.9% in Thailand, and 8% in Vietnam in 2024.
Although slightly higher, the projected increase in salaries in Southeast Asia continues to defy concerns of an economic slowdown. Additionally, attrition rates across the region have dropped in 2023 compared to 2022 yet continue to remain in the double digits, a consequence of an ever-changing talent strategy and ongoing gap between supply and demand of talent. Attrition rates are highest in the Philippines at 17.5% and lowest in Vietnam at 13.8%.
The report finds that businesses in Southeast Asia are cautiously optimistic about hiring, with 40% of companies reporting no changes to their current recruitment numbers and 40% of companies having restrictions on hiring. Despite an increase in layoffs earlier in the year, Aon’s data shows that headcount numbers across industries are still higher than pre-pandemic levels, with layoffs mainly occurring in non-core areas of the business, while organisations continue to hire for other business lines.
New hire premiums are averaging between 5.6% and 13.3%, with firms becoming more cautious with compensation spends as they streamline budgets, enhance cost efficiency, and re-evaluate compensation strategy.
Looking ahead to 2024, salaries across industries also continue to vary in addition to the differences between countries. The retail industry continues to have the highest budgeted salary increases at 6.1%, followed by technology at 6%, the life sciences and medical devices industry at 5.9%, manufacturing at 5.8%, and financial services at 4.8%.
The technology sector is expected to have the highest increase in Singapore (4.5%), Indonesia (10.2%), and Vietnam (10.9%), compared to the manufacturing industry that had the highest year-over-year salary increase across industries in Thailand (8%), Malaysia (13.7%), and Philippines (14.5%).
Across Southeast Asia – Malaysia, Philippines, and Singapore – more than half of the roles have had salary increases outrun inflation, with Singapore and Philippines having 71.7% of salary increases outrunning inflation and Malaysia at 56.4%. However, for Indonesia, Vietnam, and Thailand, on average, 70% of salary increases lag inflation. For 67% of firms in Southeast Asia, inflationary pressures are included as part of their pay policy considerations when reviewing salary increases.
