SE Asia defines economic slowdown with salary growth projected for 2024
Salaries across South-East Asia are poised to rise in 2024, defying economic slowdown concerns.
The Aon 2023 Salary Increase and Turnover Report revealed a positive outlook, with Indonesia leading at a projected 6.5% increase in median salary, followed by the Philippines at 5.5%, Thailand at 4.9%, and Vietnam at 8%. Singapore and Malaysia, however, expect stagnant growth at 4% and 5%, respectively.
While attrition rates have decreased compared to 2022, they persist in double digits. The Philippines reported the highest at 17.5%, while Vietnam maintained the lowest at 13.8%. Aon’s insights further highlighted cautious optimism among organisations in South-East Asia regarding hiring for 2024, with 40% planning to maintain current recruitment levels and an additional 40% facing hiring restrictions.
New hire premiums have decreased to an average of 5.6% to 13.3%, down from 2022’s 14.7% to 23.6%, reflecting organisations’ efforts to streamline budgets and enhance cost efficiency. Alina Cheng, Head of Data Solutions, South-East Asia for Talent Solutions, Aon, emphasised the need to address pay compression issues. “By focusing and nurturing talent from within, organisations can subsequently decrease the need for new hire premiums while enhancing their organisation’s employee value proposition,” she said.
Looking ahead to 2024, salary increases vary across industries. The retail sector leads with a 6.1% increase, followed by technology at 6%. Life sciences and medical devices, manufacturing, and financial services follow closely with increases of 5.9%, 5.8%, and 4.8%, respectively. For 67% of organisations in the region, inflationary pressures factor into pay policy considerations when reviewing salary increases.
“In challenging times, simply increasing salaries is unsustainable for organisations as they look to manage profitability and people costs amongst other factors. Having a holistic total rewards strategy based on data and analytics will therefore ensure organisations will attract and retain the right talent and continue to build a resilient workforce,” Cheng concluded.