As the year draws to a close, Southeast Asia is gearing up for major salary budget increases in 2025. A recent report by professional services firm Aon, released in November, highlights these projections.
The study, conducted between July and September 2024, involved more than 950 companies in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. It predicts that Vietnam will lead the way with a 6.7% salary increase. Indonesia is expected to see an increase of 6.3%, followed by the Philippines at 5.8%, Malaysia at 5.0%, Thailand at 4.7%, and Singapore at 4.4%.
The growing demand for skilled workers is a key driver of projected salary increases next year, despite trends of declining inflation and interest rates. This is reflected in Aon's survey, which shows that the challenge of attracting and retaining quality talent has risen to fourth on the list of top business risks in 2023, up from ninth in 2021.
Differences in salary growth trends
Projected salary increases in Southeast Asia through 2025 show significant disparities across industries.
The technology and manufacturing sectors are expected to lead the way with projected growth of 5.8%, followed by retail, consulting, business services, and life sciences, which are projected to grow by 5.4%. In contrast, the energy, financial services, and transportation sectors are expected to see more conservative increases of 4.9%, 4.8%, and 4.1%, respectively.
Geographically, the highest salary growth in the technology sector is concentrated in Vietnam and Thailand, with projections of 7.5% and 5.2%, respectively. Meanwhile, the manufacturing sector is expected to see significant growth in Indonesia and the Philippines at 6.9% and 6.1%, respectively. The consulting, business services, and community sectors are expected to see the most notable increases in Malaysia and Singapore, with projected growth of 5.9% and 5.7%, respectively.
Salary adjustments in Singapore and Thailand
Despite the overall projected salary increases in Southeast Asia in 2025, Singapore and Thailand are expected to experience more moderate adjustments compared to their regional counterparts.
As a developed country, Singapore tends to have a more conservative pace of salary adjustments compared to developing countries in Southeast Asia. This is due to lower inflation rates and more moderate gross domestic product (GDP) growth.
Thailand, on the other hand, faces challenges in talent mobility due to language barriers and inadequate infrastructure, resulting in less competition for labor and a slower rate of salary growth.
