Budgeted salary increase sustained amid retention, recruitment challenges
Salary increases in Southeast Asia are estimated at 5.3% for 2026, according to Aon's latest report, amid retention and recruitment pressures in the region.
Findings from its 2025 Salary Increase and Turnover Study showed that the projection is only slightly lower than the 5.4% salary increase this year, but remains higher than the 5.1% in 2024.
Vietnam recorded the highest projected salary increase at 7.1%, followed by Indonesia at 5.9%. Other SEA countries have the following estimates:
- Philippines (5.2%)
- Malaysia (4.8%)
- Thailand (4.7%)
- Singapore (4.3%)
Hiring, retention challanges
These estimates come as 42% of employers in the region report challenges in hiring or retaining employees.
Another 63% of firms said they are also facing a skills gap challenge, while others anticipate short-term (12%) and longer-term (16%) gaps, according to the report.
Attrition is also slightly higher in the region at 17.5% compared to 17.4% last year.
The Philippines saw the highest attrition rate in 2025 at 20.0%, followed by Singapore (19.3%), and then Malaysia (18.2%).
"As capital deployment in technology and strategic investments accelerate across Southeast Asia, organisations are increasingly focused on retaining top talent and highly skilled employees," said Rahul Chawla, partner and head of Talent Solutions for Southeast Asia at Aon, 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."
In-demand jobs in SEA
Meanwhile, the report also revealed that most organisations are planning to maintain and expand their workforce despite hiring and retention challenges.
The most in-demand roles are sales (24%) and information technology (24%). Other hot jobs include:
- Artificial intelligence/machine learning (21%)
- Cybersecurity (20%)
- Engineering (19%)
According to Aon, the demand for these roles indicates sustained compensation strategies in order to secure talent needed for the jobs.
"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, in a statement.
"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."
