Amidst the backdrop of a challenging economic climate, Aon plc (NYSE:AON)'s 2023 Salary Increase and Turnover Report for Southeast Asia, released Tuesday, paints a cautiously optimistic picture for the region's workforce. The report anticipates salary rises in 2024, with countries like Indonesia and Vietnam expecting significant increases.
- Indonesia is projected to witness a 6.5% rise in median salaries.
- Vietnam's median salaries are expected to surge by 8.0%.
- The Philippines could see a 5.5% increase.
- Thailand's median salaries are forecasted to grow by 4.9%.
In contrast, Singapore and Malaysia are predicted to maintain steady growth rates at 4.0% and 5.0%, respectively.
Despite earlier layoffs in the year, businesses are showing restraint in hiring practices, with 40% reporting no change in recruitment numbers and an equal percentage imposing hiring restrictions. This cautious approach is also reflected in new hire premiums, which average between 5.6% and 13.3%, marking a decrease from the previous year.
The technology sector is expected to experience some of the highest increases across Singapore, Indonesia, and Vietnam. In Malaysia, the Philippines, and Singapore, over half of the roles have observed salary hikes surpassing inflation rates. Conversely, approximately 70% of salary increments in Indonesia, Vietnam, and Thailand have not kept pace with inflation.
The retail industry leads with the highest budgeted salary increases at 6.1%, followed closely by technology at 6.0%, life sciences and medical devices at 5.9%, manufacturing at 5.8%, and financial services trailing at 4.8%.
Rahul Chawla, Aon's head of Talent Solutions for Southeast Asia, emphasized the critical role of advanced analytics in compensation strategy reassessment for firms navigating cost volatility and investment uncertainty. He pointed out that leveraging internal and market data aids companies in making well-informed decisions.
Alina Cheng, Aon's head of Data Solutions, highlighted another challenge facing businesses: pay compression issues that emerge when new hires are brought in at higher wages than long-standing employees, which can lead to increased attrition rates and declining employee morale.
Attrition rates have seen a dip in 2023 compared to the previous year but remain high due to a persistent talent supply-demand gap and evolving talent strategies. The Philippines recorded the highest attrition rate at 17.5%, while Vietnam reported the lowest at 13.8%.
The report is based on insights from 950 companies across Southeast Asia, emphasizing the importance of a holistic total rewards strategy that incorporates data and analytics to attract and retain talent effectively.
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