As Southeast Asia approaches 2025, a new report suggests that salary increases in the region will surpass those of 2024. Businesses are planning to raise salary budgets and maintain or expand their workforce.
The analysis surveyed over 950 companies in countries including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, highlighting a significant shift in labor market dynamics. The report reveals that anticipated salary increase rates for 2025 are projected to be higher than those in 2024. Despite a softening inflationary environment, salary increases are hardening, indicating a growing discrepancy between talent supply and demand.
The demand for skilled talent, particularly in technology sectors, is driving this upward trend in salary budgets. The report outlines specific salary increase projections for various industries in Southeast Asia. Technology and manufacturing sectors are expected to see the highest budgeted salary increases at 5.8%. Retail, consulting, business and community services, and life sciences and medical devices are projected to receive a bump of 5.4%. Energy, financial services, and transportation industries are expected to experience lower increases, with projections of 4.9%, 4.8%, and 4.1% respectively.
Singapore and Thailand are projected to lag behind the regional average in salary increases, with budgeted increases of 4.4% and 4.7% respectively. The increasing difficulty in attracting and retaining top talent has become a significant risk for organizations in the Asia-Pacific region. This issue has escalated from the ninth top risk in 2021 to the fourth in 2023, according to Aon’s Global Risk Management Survey. The competition for skilled professionals is intensifying, and companies are recognizing the need to enhance their compensation packages to remain competitive.