Indonesia’s salary hike in 2023 expected to exceed APAC average

Employees in Indonesia can look forward to an average 6.1% increase in their salaries next year, up from 5.8% this year, according to Mercer’s annual Total Remuneration Survey (TRS) 2022.

The forecasted salary increment is above the Asia Pacific average of 4.8%. However, despite signs of recovery among organisations in Indonesia, salary increments have yet to reach their pre-pandemic highs of 6.9% in 2019.

Across Asia, the overall average salary increases reflect a divergence in pay progression between emerging and developed economies, ranging from 9.1% in India to 2.2% in Japan.

As for bonuses this year, most industries are likely to see a slight increase, with the exceptions of high tech (18.5%, down from 18.9%) and mining and mining services (35.8%, down from 47.6%). The latter’s target bonus payout is, however, the highest among all the industries surveyed.

Beyond financial incentives, the report also found employers in Indonesia are cautiously optimistic about the business outlook for 2023, despite the high inflation rates experienced in 2022 and the general economic slowdown. While fewer companies are increasing their headcount in 2023 (35%), as compared to 2022 (43%), only 2% of companies intend to decrease headcount next year, compared to 5% observed in 2022.

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Godelieve van Dooren, CEO of South-East Asia Growth Markets, Mercer, concluded, “While organisations may be more prudent with their resources during this time, they should still ensure that their packages are attractive and relevant by offering benefits like flexible work arrangements and employee wellbeing support, so that new talent will continue to flow through and the existing workforce remains engaged.”