Aon plc has released new projections indicating that salary increases across Southeast Asia are expected to average 5.3% in 2026, according to its latest Salary Increase and Turnover Study.
The research – which surveyed more than 700 organisations spanning Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – provides insight into compensation trends and workforce dynamics in the region.
The study’s findings show that salary growth will continue at a moderate pace, with Vietnam forecasted to see the highest average increase at 7.1%. Indonesia and the Philippines are also expected to see above-average growth, at 5.9% and 5.2%, respectively.
In contrast, Malaysia, Singapore, and Thailand are projected to see more modest increases, ranging from 4.3% to 4.8%.
Sector analysis reveals that salary adjustments are not uniform across industries. In Singapore, the life sciences and medical devices sector is expected to lead with a 4.6% increase.
Technology roles are projected to see the largest salary hikes in Vietnam and Indonesia, while consulting and business services are expected to top the list in Malaysia.
Rahul Chawla, partner and head of Talent Solutions for Southeast Asia at Aon, said organisations in the region are placing greater emphasis on holding onto experienced and highly skilled employees as investment in technology and strategic initiatives continues to grow.
“Balancing rising compensation costs with the need for agility is key. The most successful firms are leveraging real-time market data and total rewards strategies to stay ahead,” he said.
The report highlights persistent double-digit attrition rates across the region. The Philippines and Singapore are expected to experience the highest turnover in 2025, at 20.0% and 19.3%, respectively.
Malaysia, Thailand, Indonesia, and Vietnam also report significant attrition, with rates ranging from 15.0% to 18.2%.
Attrition is not evenly distributed across sectors. Consulting, business, and community services are experiencing the highest turnover, followed by retail and manufacturing.
The study notes that 42% of organisations are facing difficulties in hiring or retaining staff, and 63% are currently dealing with skills gaps.
Information technology, engineering, and sales positions are among the most challenging to fill, with new hire salary premiums declining as companies seek to manage costs.
A separate Aon survey focusing on Malaysia found that more than half of employees aged 30 to 34, and 40% of those under 29, are considering changing jobs within the next year. Employees with three to five years of tenure are also more likely to seek new opportunities.
Flexible work arrangements have become a leading consideration for job seekers, with 57% of respondents identifying it as a top priority. Work-life balance and opportunities for professional development are also key factors influencing employment decisions.
Aon’s global research supports these regional trends, with 60% of employees worldwide indicating they are considering leaving their current roles within a year. Wellbeing and work-life balance are increasingly prioritised, particularly among younger workers, with Generation Z ranking work-life balance just behind medical benefits in importance.
According to Aon’s latest Salary Increase and Turnover Study, the demand for digital and risk-focused skills is shaping recruitment strategies.
Sales, information technology, artificial intelligence and machine learning, cybersecurity, and engineering are identified as the most sought-after roles.
The growing emphasis on AI and cybersecurity reflects a shift in business priorities as companies adapt to technological change and evolving risk landscapes.
Evon Lock, head of data solutions for Southeast Asia at Aon, noted that while companies are experiencing challenges related to recruitment and employee retention, many remain measured in their outlook and intend to either sustain or slightly expand their staffing levels.
“To navigate an uncertain business landscape, firms are prioritising productivity gains, streamlining management layers, and adopting targeted hiring strategies and salary increases to engage top performers and build resilient, future-ready teams,” she said.
