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Salaries in Singapore expected to increase around 4.7% in 2023: Aon

Bryan Wu
Bryan Wu12/15/2022 11:54 AM GMT+08  • 3 min read
Salaries in Singapore expected to increase around 4.7% in 2023: Aon
With the rise of fintech and digital banks in the SEA region, roles in areas such as risk, compliance and talent acquisition are in demand. Photo: Bloomberg
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Salaries in Southeast Asia (SEA) are expected to increase slightly for 2023 compared to 2022, with tech and finance set to lead the way, says a new Aon survey.

According to the findings, inflation is playing a significant role in how salary changes look across the region, which is also being driven by supply and demand in the talent market. High attrition rates across the region in 2022 are putting pressure on firms to use compensation measures to tackle hiring and retention challenges.

The study was conducted during 3Q2022, and surveyed the salary changes and turnover rates of more than 700 companies across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Median salary increase budgets are forecasted across industries at 6.8% for Indonesia, 5.1% for Malaysia, 6% for the Philippines, Singapore at 4.7%, 5.1% for Thailand and 7.9% for Vietnam. This equates to a 5.9% expected salary increment expected in 2023 for the Asean-6 grouping on average.

The survey further revealed that salary increases in 2022 varied across industries across the region, with the retail industry having the highest increases of 6.5%, followed by technology and life sciences at 6.1% and financial institutions with 5.9%.

The ongoing technology and digital skills shortage across the region as a consequence of firms competing to accelerate transformation and drive their digital initiatives resulted in higher year on year increases in salaries and total compensation for technology and data analytics roles compared to others. The rise of fintech and digital banks in SEA has also seen roles in areas such as risk, compliance and talent acquisition in demand.

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Aon found that firms are paying a premium to attract new talent at the junior and middle management levels for these roles. “Over the past two years, we have seen compensation structures shifting towards lesser variables and pay at risk and an increased focus on salaries,” says Alina Cheng, human capital solutions senior consultant for SEA.

However, with the recent reports of a potential global economic slowdown, Aon points out that firms are taking a cautious approach and focusing on salary increases for selected employee groups or levels as they navigate a volatile and uncertain environment.

Rahul Chawla, partner and head of human capital solutions for SEA says: “While it is critical for businesses to define and adapt pay for different worker types and the nature of the work, organisations must stay agile as they rethink their pay principles. Businesses need to shape their strategies towards long-term drivers of pay and performance by making changes in a phased manner to optimise pay effectiveness.”

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Chawla believes that 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.”

“There is no one-size-fits-all approach for developing a salary increase strategy in a volatile environment. Employers must constantly analyse the market, study the available data and contextualise the unique circumstances of their industry and organisation to make better and more informed decisions,” adds Cheng.

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