As the yr ends, Southeast Asia is preparing for significant increases in its wage budget in 2025. A recent report from skilled services firm Aon, released in November, highlights these forecasts.
The study, conducted between July and September 2024, involved over 950 corporations from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. He predicts that Vietnam can be the leader, increasing wages by 6.7%. Indonesia is predicted to grow by 6.3%, followed by the Philippines by 5.8%, Malaysia by 5.0%, Thailand by 4.7% and Singapore by 4.4%.
Growing demand for expert employees is the principal factor behind projected wage increases next yr, despite the downward trend in inflation and rates of interest. This is reflected in Aon’s survey, which shows that the challenge of attracting and retaining high-quality talent has risen to fourth place on the list of top business risks in 2023, in comparison with ninth in 2021.
Differences in wage growth trends
Projected wage increases in Southeast Asia by 2025 show significant disparities across industries.
The technology and manufacturing sectors are expected to guide with forecast growth of 5.8%, followed by retail, consulting, business services and life sciences with forecast growth of 5.4%. In contrast, the energy, financial services and transport sectors are expected to see more conservative growth of 4.9%, 4.8% and 4.1%, respectively.
Geographically, the best tech wage growth is in Vietnam and Thailand, where forecasts are 7.5% and 5.2%, respectively. Meanwhile, the manufacturing sector is predicted to experience significant growth in Indonesia and the Philippines, growing by 6.9% and 6.1% respectively. The consulting, business services and community sectors in Malaysia and Singapore are expected to see probably the most notable growth, with projected growth of 5.9% and 5.7% respectively.
Salary adjustments in Singapore and Thailand
Despite overall projected wage increases in Southeast Asia in 2025, Singapore and Thailand are expected to see more moderate adjustments in comparison with their regional counterparts.
As a developed country, Singapore has a more conservative rate of wage adjustment in comparison with developing countries in Southeast Asia. This is resulting from lower inflation and more moderate gross domestic product (GDP) growth.
Thailand, however, faces talent mobility challenges resulting from language barriers and inadequate infrastructure, leading to less competition for labor and a slower rate of wage growth.
