A recent Aon Global Risk Management Survey predicts salary budget increases across Southeast Asia in 2025, surpassing those in 2024.
The report estimates salary hikes ranging from 4.4% in Singapore to 6.7% in Vietnam. Other countries, such as the Philippines, Malaysia, and Thailand, are expected to see increases of 5.8%, 5.0%, and 4.7%, respectively.
In Indonesia, workers can anticipate a 6.3% salary hike in 2025, making it one of the highest in the region, second only to Vietnam.
This forecast comes ahead of President Prabowo Subianto’s recent announcement of a 6.5% increase in provincial minimum wages (UMP) for 2025 during a press briefing at the Presidential Palace in Jakarta.
Insights from Aon’s Analysis
Aon’s survey analyzed data from 950 companies across six Southeast Asian countries from July to September 2024.
According to the findings, businesses in the region are maintaining steady activity and even planning workforce expansion in the coming years.
Despite easing inflationary pressures, companies remain committed to raising wages. This reflects a significant gap between labor supply and demand, which, according to Rahul Chawla, Partner and Head of Talent Solutions at Aon Southeast Asia, outweighs the impact of inflation:
“Even as inflation softens, salary increases remain strong. This indicates that the high demand for skilled labor, particularly in the rapidly evolving technology sector, is the dominant driver of projected salary growth,” Chawla explained, as quoted by CNBC Indonesia.
New technologies like ChatGPT have fueled demand for emerging skills such as prompt engineering, a role that was virtually unknown two years ago.
Industry-Specific Projections
Among industries, the technology and manufacturing sectors are forecasted to lead salary growth, with budget increases of 5.8%. Retail, consulting, business services, and life sciences are projected to grow by 5.4%, while energy, financial services, and transportation expect smaller hikes of 4.9%, 4.8%, and 4.1%, respectively.
Country-specific data highlights:
- Vietnam: The technology sector will see the highest growth at 7.5%.
- Indonesia: Manufacturing leads with a 6.9% hike.
- Malaysia and Singapore: Consulting, business, and community services are projected to grow by 5.9% and 5.7%, respectively.
Challenges in Recruitment and Retention
The survey also revealed that 64% of companies face challenges in hiring and retaining employees.
Nearly one-third of the surveyed businesses plan to increase their workforce by 5% to 20%, focusing on simplifying management layers and recruiting impactful talent.
“This issue has climbed to the fourth-highest risk for organizations, up from being outside the top ten just two years ago,” said Chawla.
Employers are under pressure to balance rising compensation costs with the need to secure top talent. Chawla emphasized that companies must adopt proactive strategies, leveraging real-time data and predictive analytics to remain competitive:
“Agile companies use these tools to understand broader market trends, such as in-demand roles and cost-saving opportunities,” he added.
Southeast Asia Salary Projections for 2025
As reported by Aon (via Suara.com), here are the 2025 salary budget projections for six Southeast Asian countries compared to the previous two years.:
- Vietnam
- 2023: 7.5%
- 2024: 6.4%
- 2025: 6.7%
- Indonesia
- 2023: 6.0%
- 2024: 5.7%
- 2025: 6.3%
- Philippines
- 2023: 5.2%
- 2024: 5.4%
- 2025: 5.8%
- Malaysia
- 2023: 5.0%
- 2024: 4.9%
- 2025: 5.0%
- Thailand
- 2023: 4.7%
- 2024: 4.4%
- 2025: 4.7%
- Singapore
- 2023: 4.0%
- 2024: 4.2%
- 2025: 4.4%
Singapore’s slower growth reflects lower inflation and GDP growth compared to its neighbors, while Thailand faces challenges like a less flexible workforce in terms of language and mobility.
A Region Poised for Growth
Despite varying challenges, Southeast Asia remains optimistic, with businesses budgeting for salary increases and workforce expansion. This trend highlights the region’s economic potential, continued global investment, and its emergence as a hub for skilled labor and new technologies.
Sources: jakartaglobe.id, cnbcindonesia.com, suara.com
Special Image credit: CNBCTV
The post Indonesia and Vietnam Lead Southeast Asia in 2025 Salary Hikes appeared first on Expat Indonesia.
