South-East Asia expected to see salary hike in 2023
Salaries in South-East Asia are expected to increase slightly in 2023 compared to 2022, a study from global professional firm Aon has revealed.
According to the 2022 Salary Increase and Turnover Study, median salary increases are forecast across industries at 6.8% for Indonesia, 5.1% for Malaysia, 6% for the Philippines, 4.7% for Singapore, 5.1% for Thailand, and 7.9% for Vietnam.
Inflation was identified as the main factor in determining how salaries change in the region, but supply and demand in the talent market also played a significant role. In 2022, attrition rates were found to be at 15.9% in Indonesia, 14.9% in Malaysia, 18% in the Philippines, 19.6% in Singapore, 15.4% in Thailand, and 15.2% in Vietnam. This, in turn, has placed pressure on organisations to use compensation measures to address hiring and retention challenges.
Across all industries in the region, retail was found to have the highest salary increase (6.5%), followed by technology and life sciences (6.1%), and financial institutions (5.9%).
Technology and digital skills shortages continue in the region as firms compete to accelerate transformation and drive their digital initiatives, resulting in higher salaries and total compensation for technology and data analytics roles. However, in a volatile and uncertain economic environment, organisations are expected to take a more cautious approach by focusing salary increments on selected employee groups or levels.
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Rahul Chawla, Partner and Head of Human Capital Solutions for South-East Asia at Aon, said, “Organisations must stay agile as they rethink their pay principles. Businesses need to shape their strategies towards long-term drivers of pay and performance by making changes in a phased manner to optimise pay effectiveness.”