Global professional services company Aon plc has released its 2024 Salary Increase and Turnover Study, which forecasts salary growth across Southeast Asia in 2025.
The study, conducted between July and September 2024, examined salary adjustments and turnover trends at over 950 organisations in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
The report indicated that 2025 salary increases will outpace 2024 figures in most countries.
Vietnam leads with a projected increase of 6.7%, followed by Indonesia at 6.3%, the Philippines at 5.8%, Malaysia at 5.0%, Thailand at 4.7%, and Singapore at 4.4%.
Salary growth varies across industries. The technology and manufacturing sectors are expected to see the highest increases, with budgets set at 5.8%. Retail, consulting, business services, and life sciences sectors follow closely at 5.4%. Conversely, energy (4.9%), financial services (4.8%), and transportation (4.1%) report the lowest projected growth.
On a geographic level, Vietnam’s technology sector is expected to see the largest increase at 7.5%, while manufacturing leads in Indonesia (6.9%) and the Philippines (6.1%). In Malaysia and Singapore, consulting and business services sectors are projected to experience the highest pay growth at 5.9% and 5.7%, respectively.
Attrition remains a significant challenge for employers across Southeast Asia. The consulting and business services sector has the region’s highest turnover rate, reaching 23%. Other sectors with notable attrition rates include life sciences (18.4%) and energy (18.0%).
Involuntary turnover is also a concern, with consulting reporting an 8.9% rate, the highest among industries.
Aon’s data further showed that 64% of companies face difficulties in hiring or retaining employees.
Additionally, around one-third of the surveyed firms plan to expand their workforce by 5% to 20% in the near term. Information technology, engineering, and sales roles continue to be the most challenging to fill, consistent with 2023 trends.
New hire compensation premiums, previously ranging from 5.6% to 13.3%, have now moderated to between 1.3% and 8.2%.
Cybersecurity roles saw a 160% year-on-year increase in demand, while positions related to artificial intelligence, machine learning, and risk management rose by 100% and 70%, respectively. Compensation for these roles has experienced double-digit growth compared to 2023.
Rahul Chawla, Aon partner and head of talent solutions for Southeast Asia, noted that talent attraction and retention are becoming increasingly critical, now ranking as the fourth-highest risk for organisations globally.
“According to Aon’s Global Risk Management Survey, failure to attract and retain talent now ranks as the fourth highest risk on the minds of organisations – two years ago, this was not even among the top 10 risks,” he said.
He highlighted the challenges of balancing rising compensation costs with the need to secure skilled workers.
“Employers today are in an unenviable situation of balancing the rising cost of compensation with the distinct challenge of attracting and retaining top talent. The talent market is dynamic, providing agile firms the opportunity to be proactive in their talent strategies with the help of total reward levers,” Chawla said.
Wan Hua Cheng, Aon’s director of talent analytics for Southeast Asia, noted shifts in workforce dynamics.
“Involuntary turnover reflects shifts in skilled and low-wage labour market dynamics. In 2024, managerial levels are experiencing higher involuntary turnover due to reduced demand and economic restructuring,” she said.
Aon advises organisations to adopt data-driven talent strategies, including the use of predictive analytics, to navigate market trends effectively. These tools can help firms manage costs, identify in-demand skills, and prioritise investments in workforce development.
