Budget salary increases in Southeast Asia are expected to be higher in 2025 than in 2024, a new report shows.
Writers as Able | Stocks | Getty Images
Budget wage increases in Southeast Asia are expected to be higher in 2025 than in 2024 as the end of the year approaches, according to a November report Report Provided by professional services firm Aon.
Beyond this, businesses in the region are likely to maintain or increase their total workforce, according to the study, which was conducted from July to September 2024.
Notably, the failure to attract and retain top talent has become a key risk for organizations in Asia Pacific, rising from the ninth-highest risk in 2021 to the fourth-highest risk in 2023, according to Aon. Global Risk Management Survey.
“(Estimated) salary growth in 2025 will still be higher than (2024), and we expect lower inflation and lower interest rates going forward,” said Rahul Chawla, partner and head of talent at Aon Solutions in Southeast Asia, told CNBC did it.
“So what this really means is that even though the inflationary environment has softened, salary increases are still increasing, which means that the talent supply and demand differential goes beyond inflation,” he said.
While inflation remains a factor in expected growth, other factors also come into play, such as the region’s high demand for skilled talent.
Southeast Asia, for example, has been a “sandbox environment for many tech companies, such as Singapore, to set up shop and therefore attract capital… which then creates a demand for talent to service that growth,” Chawla said .
“That’s the speed at which technology is moving, right? So things like just-in-time engineering — maybe wouldn’t have existed as an important skill two years ago, but now, with ChatGPT… it’s very new There is now a huge demand for skills,” said Cheng Wanhua, Director of Talent Analysis at Aon Southeast Asia.
Here’s how much salary budgets are expected to increase in six Southeast Asian countries in 2025, according to Aon Group.
Vietnam
Real salary increase in 2023: 7.5%
Real salary increase in 2024: 6.4%
Budgeted salary growth 2025: 6.7%
Indonesia
Real salary increase in 2023: 6%
Real salary increase in 2024: 5.7%
Budgeted salary increase for 2025: 6.3%
the Philippines
Real salary increase in 2023: 5.2%
Real salary increase in 2024: 5.4%
Budgeted salary increase for 2025: 5.8%
Malaysia
Actual salary increase in 2023: 5%
Real salary increase in 2024: 4.9%
Budgeted salary growth for 2025: 5%
Thailand
Real salary increase in 2023: 4.7%
Real salary increase in 2024: 4.4%
Budgeted salary increase for 2025: 4.7%
Singapore
Real salary increase in 2023: 4%
Real salary increase in 2024: 4.2%
Budgeted salary increase for 2025: 4.4%
According to the report, salary increases in various industries in Southeast Asia also vary, with technology and manufacturing budgets experiencing the highest growth of 5.8%. Retail; consulting, business and community services; life sciences and medical equipment are expected to grow 5.4%.
At the lower end of the spectrum are the energy (4.9%), financial services (4.8%) and transportation (4.1%) industries, the data shows.
Notably, the survey also found that Singapore and Thailand are expected to lag behind the wider region in budgeted salary growth by 2025, at 4.4% and 4.7% respectively.
“Singapore’s salary growth generally lags behind other markets in Southeast Asia. Because Singapore is a developed market, inflation tends to be lower compared to other countries that are growing faster,” Chawla said.
Furthermore, he added, the city-state’s gross domestic product growth rates tend to be lower than those of other countries in the region, resulting in smaller budget wage increases.
Thailand, on the other hand, has experienced slower economic growth than other countries in the region, Chawla said. Additionally, he added that because the country’s talent pool is “less mobile from a language and deployment perspective,” it tends to stay within its own market.
