Salary increases on the cards for 2023, but will that work?

Global financial services firm Aon has reported that salaries across Southeast Asia are set to increase further in 2023.

Vietnam had the highest median salary increase budget, at 7.9%, followed by 6.8% for Indonesia, 6.0% for the Philippines, 5.1% for both Malaysia and Thailand, and 4.7% for Singapore.

Inflation aside, high attrition rates are pressuring firms to tackle hiring and retention challenges. Singapore has an attrition rate of 19.6%, the highest in the region. This is followed by the Philippines, Indonesia, Thailand, Vietnam and Malaysia, at 18%, 15.9%, 15.4%, 15.2% and 14.9% respectively.

But offering higher salaries might not be enough to retain employees.

“Companies must define their 2023 salary increase approach in the context of the competitiveness of their current salary levels and employee value proposition. Companies that adopt a skill-based compensation programme will help ensure they can continue to build future skills for their organisation’s resilient workforce,” said Rahul Chawla, partner and head of Human Capital Solutions for southeast Asia at Aon.

The study was conducted in the third quarter of 2022, based on the salary and turnover changes in 700 companies in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

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Chief of Staff Asia