Salaries expected to recover to pre-COVID-19 pandemic levels in Southeast Asia in 2022, Aon study reveals

  • Salary increases in 2021 were
    lower than in 2020; bonus pay-outs dropped approximately 25 percent.
  • Some industries, such as private
    banking, saw continued increases in salaries while retail and professional
    services faced challenges.

SINGAPORE – Media OutReach – 15 December 2021 – The COVID-19 pandemic has weighed
heavily on talent strategies with muted salary increases across Southeast Asia,
according to a study by Aon plc (NYSE: AON), a leading global professional
services firm. The second edition of Aon’s 2021 Salary Increase and Turnover Study was conducted from June 2020 to June 2021, surveying
the salary movements and turnover rates of more than 870 companies across
Singapore, Malaysia, Thailand, Indonesia and Vietnam.

Companies must prepare for potential talent risks in
2022 following a muted 2021

In Singapore, salary increases across industries
dropped to 3.3 percent in 2021 from 3.8 percent in 2020. Similar trends were
seen in Malaysia and Thailand, with 2021 salary increases of approximately 4.5
percent and 4.4 percent, compared to 4.7 percent and 4.9 percent in 2020,
respectively. Bonus pay-outs, which were relatively insulated in 2020–calculated
for the previous performance year–also dropped between 20 – 25 percent in 2021
across Southeast Asia.

However, as
organisations settle into new and agile workforce models, compensation policies
are expected to normalise to pre-pandemic levels in 2022. The study showed that
salary increases for Singapore, Malaysia and Thailand are forecasted to recover
to 3.8 percent, 4.9 percent and 4.9 percent, respectively, in the coming year.

Voluntary turnover in 2021 remained either mostly
flat or declined, as reported in Singapore (from 11.3 percent in 2020 to 10.8
percent in 2021) and Malaysia (from 10.6 percent in 2020 to 8.7 percent in 2021),
demonstrating there is hesitation in switching employers amid an uncertain
business landscape.

However, as the Southeast Asian economy is poised to recover, Aon expects turnover to increase following the
current downturn.

Rahul Chawla, Managing Director,
Aon’s Human Capital Solutions, Southeast Asia, said: “Organisations need to
prepare for and have the right strategies for global talent trends such as ‘The
Great Resignation.’ This will be further complicated by other factors
introduced by the pandemic, such as new working models and a higher demand for
digital skills. However, these extraordinary times also present opportunities
for companies to stay ahead of the curve in the war for talent as they continue
to build resilient workforces. We expect to soon see a surge in hiring and
turnover activity so rethinking compensation and benefits strategies will be a
critical success factor to prepare for the next year.”

Retail, hospitality, and professional services continue
to face headwinds

The study also revealed how the
pandemic impacted individual sectors. In financial services, the consumer
banking industry saw minimal salary increases due to prevailing macro-economic
conditions and the business performance of banks. However, private banking saw
continued salary growth on the back of continued wealth creation in the region
and the need for sophisticated financial planning. Similarly, the life sciences
and medical devices industries saw salary increases in Singapore, Malaysia and
Thailand of 3.6 percent, 4.6 percent, and 5.0 percent respectively. In
contrast, retail, hospitality, and professional services continue to face
headwinds; for example, the Singapore market saw a salary increase of just 3.0
percent in the consulting and professional services industry.

To address some of these
challenges, data from Aon shows that organisations have invested in
different talent groups and skillsets. For example, in response
to the growing importance of digital solutions in new working
models and the need to address the increased risk to employee
health and wellbeing, salaries in IT and human resources in certain
economies such as Thailand showed the strongest recovery, with salaries for
junior employees increasing by up to 20 percent.

Median Salary Increase in 2020 and 2021

 

Country/Territory

 

 

Salary Increase 2020

 

 

Salary Increase 2021

 

 

Singapore

 

 

3.8%

 

 

3.3%

 

 

Malaysia

 

 

4.7%

 

 

4.5%

 

 

Thailand

 

 

4.9%

 

 

4.4%

 

 

Indonesia

 

 

7.5%

 

 

6.5%

 

 

Vietnam

 

 

8.5%

 

 

7.5%

 

Median Voluntary Turnover in 2020
and 2021


“The trends observed for 2021 reflect the phases of
react, recover and reshape that most companies have experienced in the last 18
months. With higher vaccination rates across Southeast Asia and the resumption
of travel, the expectation in 2022 is for a long-awaited recovery where we will
see more movements in the talent market. While continuing to fight the war for
talent, organisations can leverage these data and insights to make better, more
informed decisions as they build roadmaps to deliver enhanced value for
employees in the future,” said Chawla.

To view the study, please click here.

About the study

Aon’s Salary Increase and Turnover Study provides clients with
actionable insights to ensure their pay cycles are aligned with overall market
trends. Conducted twice a year, the study spans more than 130 countries/territories
and 4,100 companies globally.

The Salary Increase and Turnover Study covers the following key market practices:

    • Actual overall and
      merit-based salary increases

 

    • Budgeted overall and
      merit-based salary increases

 

    • Expected hiring and
      workforce growth trends

 

    • Key talent
      identification and rewards differentiation practices

 

    • Performance management
      practices

 

    • Promotion practices

 

    • Salary structure
      movement trends

 

    • Voluntary and
      involuntary turnover rates

 

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