Salaries across South-east Asia expected to increase in 2023: Aon study

WAGES across South-east Asia are expected to increase in 2023, with median salary increments forecast to rise as much as almost 8 per cent on the top end.

A recent study from financial services company Aon found that Vietnam is expected to take the lead in the region, with median salary increments of 7.9 per cent across all industries next year. Aon predicted Indonesia and the Philippines will see increments of 6.8 per cent and 6 per cent, respectively.

Malaysia and Thailand are forecast to experience median salary increments of 5.1 per cent. Singapore, meanwhile, clocked in the lowest forecast increment among the region at 4.7 per cent.

Apart from inflation, supply and demand within Asean’s talent market will drive salary increments, said Aon on Friday (Dec 9).

High attrition rates across Asean are putting pressure on firms to use wages to tackle hiring and retention challenges, Aon added. The retail sector is projected to post the highest salary increments at 6.5 per cent, with the technology and life sciences sector following behind at 6.1 per cent, and financial institutions at 5.9 per cent.

An ongoing digital skills shortage across South-east Asia has resulted in higher increments in salaries and total compensation for technology and data analytics roles. This comes as companies compete to push digital initiatives and transformation, Aon said.

Rahul Chawla, partner and head of human capital solutions for Aon in South-east Asia, said companies that adopt a skill-based compensation programme will ensure they are building future skills for their organisations’ workforce.

Alina Cheng, Aon South-east Asia senior consultant of human capital solutions, noted that risk, compliance and talent acquisition roles are in demand amid the rise of fintech and digital banks in the region. As companies pay a premium to attract new talent at the junior and middle-management levels for these roles, compensation structures have shifted to focus on salaries and less on variable pay or pay-at-risk structures.

The study, which was conducted in Q3 of 2022, surveyed some 700 companies in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam on expected salary changes and turnover rates.