business

Marginal salary increase in Southeast Asia, says Aon study

KUALA LUMPUR: Salaries in Southeast Asia are expected to increase slightly for 2023 compared to 2022, a study by Aon plc said.

While inflation played a significant role in how salary changes look across the region, they were also driven by supply and demand in the talent market, the survey said. 

"High attrition rates across Southeast Asia in 2022 are putting pressure on firms to use compensation measures to tackle hiring and retention challenges: 15.9 per cent in Indonesia, 14.9 per cent in Malaysia, 18 per cent in the Philippines,19.6 per cent in Singapore, 15.4 per cent in Thailand and 15.2 per cent for Vietnam," it said.

The study was conducted in the third quarter (Q3) of 2022, surveying the salary changes and turnover rates of more than 700 companies across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Besides that, the study said median salary increase budgets were forecasted across industries at 6.8 per cent for Indonesia, 5.1 per cent for Malaysia, 6.0 per cent for the Philippines, Singapore at 4.7 per cent, 5.1 per cent for Thailand and 7.9 per cent for Vietnam.

Aon partner and Southeast Asia head of human capital solutions Rahul Chawla said while it was 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.

"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 skill-based compensation programme will help ensure they can continue to build future skills for their organisation's resilient workforce," he said.

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