Compensation Benefits
Southeast Asia salary growth to remain stable at 5.3% in 2026: report
Vietnam leads the region with a projected 7.1% wage hike, as companies face rising challenges of talent retention and skills gap.
According to a new report from UK-based professional services firm Aon, wage increases across Southeast Asia are expected to hold steady at 5.3% in 2026 despite growing challenges in recruiting and retaining talent in the region.
In its 2025 Salary Increase and Turnover Study, Aon found that the projected increase is slightly lower than the 5.4% average wage hike this year, but remains above the 5.1% recorded in 2024.
Vietnam is expected to see the highest salary growth next year at 7.1%, followed by Indonesia (5.9%), the Philippines (5.2%), Malaysia (4.8%), Thailand (4.7%), and Singapore (4.3%).
The report noted that 42% of Southeast Asian employers struggle to hire and retain employees, while 63% cite skill shortage as a major challenge. Of those, 12% say the issue is temporary, while 16% see it as a long-term concern.
Average attrition in the region rose slightly to 17.5%, up from 17.4% last year. The Philippines recorded the highest attrition rate at 20.0%, followed by Singapore (19.3%) and Malaysia (18.2%).
"As capital deployment in technology and strategic investments accelerates across Southeast Asia, organisations are increasingly focused on retaining top talent and highly skilled employees," Rahul Chawla, partner and head of Talent Solutions for Southeast Asia at Aon, said in a statement. "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."
The study also found that most companies plan to maintain and expand their workforce in 2026. The most in-demand roles are sales and information technology at 24% each, followed by AI and machine learning (21%), cybersecurity (20%), and engineering (19%).
"Despite the hiring and retention pressures, most organisations remain cautiously optimistic, planning to maintain or modestly grow their workforce," said Evon Lock, head of data solutions for Southeast Asia at Aon. "To navigate an uncertain business landscape, firms are prioritizing productivity gains, streamlining management layers, and adopting targeted hiring strategies and salary increases to engage top performers and build resilient, future-ready teams."
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