Thailand: Inflation, attrition push up salaries
The median salary increase for Thailand in 2023 will be 5.1% compared with this year, according to a survey of more than 700 companies in the six largest Southeast Asian economies by Aon Plc, a global professional services firm.
The figure for Thailand compares with an expected median increase of 7.9% in Vietnam, 6.8% in Indonesia, 6% in the Philippines, 5.1% in Malaysia and 4.7% in Singapore, the company’s 2022 Salary Increase and Turnover Study found.
While inflation plays a significant role in how salary changes look across the region, supply and demand in the talent market is also a big factor, Aon found in the survey conducted in the third quarter of this year.
High attrition rates across Southeast Asia in 2022 are putting increasing pressure on employers to use compensation measures to tackle hiring and retention challenges. Singapore topped the region with a reported attrition rate of 19.6%, followed by the Philippines (18%), Indonesia (15.9%), Thailand (15.4%), Vietnam (15.2%) and Malaysia (14.9%).
“While it is critical for businesses to define and adapt pay for different worker types and the nature of the work, organisations must stay agile as they rethink their pay principles,” said Rahul Chawla, partner and head of Human Capital Solutions for Southeast Asia at Aon.
“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.
“In addition, companies must define their 2023 salary increase approach in the context of the competitiveness of their current salary levels and employee value proposition. Companies that adopt a skills-based compensation programme will help ensure they can continue to build future skills for their organisation’s resilient workforce.”
The survey further revealed that salary increases in 2022 varied across industries, with the retail industry having the highest increases (6.5%), followed by technology and life sciences (6.1%) and financial institutions (5.9%).
The ongoing shortage of technological and digital skills as firms compete to accelerate transformation and drive digital initiatives resulted in higher year-on-year increases in salaries and total compensation for tech and data analytics roles compared with other fields, Aon found.
However, in light of a potential global economic slowdown next year, employers are taking a cautious approach and focusing on salary increases for selected employee groups or levels as they navigate a volatile and uncertain environment.
“With the rise of fintech and digital banks in the region, roles in areas such as risk, compliance and talent acquisition are in demand,” said Alina Cheng, senior consultant for Human Capital Solutions in Southeast Asia at Aon.
“Firms are paying a premium to attract new talent at the junior and middle management levels for these roles. As a result, over the past two years, we have seen compensation structures shifting towards less variables and pay-at-risk and an increased focus on salaries.
“There is no one-size-fits-all approach for developing a salary increase strategy in a volatile environment. Employers must constantly analyse the market, study the available data and contextualise the unique circumstances of their industry and organisation to make better and more informed decisions.”