How many employers plan to boost headcount?
Indonesia's average salary increase is expected to rise to 6.1% in 2023 — set to surpass Asia Pacific's average of 4.8%, according to a new report from Mercer.
The increase goes up from the 5.8% recorded this year, according to the report, which noted that the increments have been "increasing steadily" since the 5.5% posted at the height of the pandemic in 2021.
"Salary increments are gradually returning to pre-pandemic norms as more organizations bounce back from the pandemic. Some employers are also responding to the higher inflation rate. This is also aligned with higher GDP growth expected in Indonesia this year," said Astrid Suryapranata, market leader for Indonesia.
Despite the growth, Indonesia has yet to catch up to the 6.9% salary increments recorded in 2019 before the pandemic.
"It will take a while longer for companies to pick up pace given the broad impact of the inflation rate hike," Suryapranata said.
Industry projections
Mercer's Total Renumeration Survey (TRS), which surveyed 550 organisations across seven industries, found that emerging tech is projecting the highest salary increase of 8.2%.
The high-tech industry is also expecting a large 6.9% increase, followed by life sciences at 6.4.
In terms of salary increases compared to the prior year, the mining and mining services reported the highest jump from 5.7% to 6.3% in 2023.
"Mining and mining services is the only industry that has exceeded its pre-pandemic salary increment of 5.7% in 2019 in its projection, and this is due to the rapid increase in commodity prices since the start of 2021," Suryapranata said.
Bonus payouts are also expected to inch up across most industries, according to the report, except for high tech (18.5%) and mining and mining services (35.8%) industries.
'Cautiously optimistic' business outlook
The report also found that 35% of employers plan to increase headcount in 2023 — compared to 43% in 2022. But only two per cent of employers plan to reduce headcount next year, down from five per cent this year.
The figures reflect a "cautiously optimistic" outlook for employers, according to the report, which attributed the situation to a general economic slowdown and high inflation rates experienced in 2022.
The report also found that the voluntary attrition rate in Indonesia is "relatively stable" at eight per cent, but employers are urged to avoid being complacent over the situation.
"It is heartening to note that Indonesia is not experiencing a heightened increase in employee turnover this year, unlike other markets in the region. But employers should not be complacent," said Godelieve van Dooren, Mercer's CEO for South East Asia Growth Markets.
"They should leverage this relative stability, which comes with some breathing room, to review and improve on their compensation and rewards strategies ahead of 2023."
Employers are told to ensure that their compensation packages are "attractive and relevant" by going beyond pay.
"While companies may be more prudent with their resources during this time, they should still ensure that their packages are attractive and relevant by offering benefits like flexible work arrangements and employee wellbeing support, so that new talent will continue to flow through and the existing workforce remains engaged."
