Salary hike for Singapore workers expected to be flat in 2024

SINGAPORE: In the face of slower economic growth, the 2024 job market for Singaporean workers appears subdued, with salary increases projected to remain at a lukewarm 4%, according to a report by global professional services firm Aon.

Aon’s 2023 Salary Increase and Turnover Study revealed a stark contrast among Southeast Asian nations, with Singapore and Malaysia anticipating stagnant salary growth in 2024. Meanwhile, Indonesia leads the region with a projected median salary increase of 6.5%, followed by the Philippines at 5.5%, Thailand at 4.9%, and Vietnam at 8.0%.

A concerning trend emerged as talent attrition rates rose, reaching 16.2% in Malaysia and 17.5% in the Philippines in 2023. Vietnam, however, boasts the lowest attrition rate at 13.8%, highlighting regional variations driven by evolving talent strategies and the persistent talent supply-demand gap.

Despite the challenges, there’s cautious optimism about hiring in Southeast Asia, with 40% of companies reporting no changes to recruitment numbers, while 40% are imposing hiring restrictions.

Companies also exercise prudence in compensation spending, with new hire premiums averaging between 5.6% and 13.3%, a significant contrast to the hiring boom in 2022, when premiums ranged from 14.7% to 23.6%.

Looking ahead to 2024, salary variations persist across industries in Malaysia, with the retail sector leading at 5.2%, followed by technology, life sciences, medical devices, and manufacturing at 5.0%, and financial services at 4.5%.

Interestingly, over half of roles in Singapore, Malaysia, and the Philippines see salary increases outpacing inflation, with 71.7% in Singapore and the Philippines and 56.4% in Malaysia.

However, in Indonesia, Vietnam, and Thailand, an average of 70% of salary increases lag behind inflation, prompting 67% of Southeast Asian firms to consider inflationary pressures when reviewing salary adjustments.

The insights presented in the Aon report are based on data collected in Q3 2023 from 950 companies across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, providing a comprehensive overview of the complex landscape shaping the salary and hiring trends in the region.