In spite of recent global economic turmoil, pay rises in organisations across the Asia Pacific (APAC) region are expected to hold steady until 2026. According to the latest Salary Budget Planning Report by Willis Towers Watson (WTW), average salary increase budgets in APAC are projected to reach 5.2%, a slight increase from 5.1% in 2025.
This steady outlook comes as businesses adopt various strategies to navigate an increasingly complex labour market. While two out of five organisations are posting lower budgets due to weaker financial results and cost management, the report noted that 15% of organisations are also projecting higher salary increase budgets due to a highly competitive talent pool and inflationary pressures.
Gary Goh, the Rewards Data Intelligence Practice Leader for Singapore at WTW, said the overall stability belies a strategic shift in how businesses distribute compensation and prioritise investments in the region. “Rather than simply reacting to economic trends, companies are proactively reshaping their approach to better align with broader business objectives, even in uncertain times,” he said.
Projections on the average salary increase per year vary by market across the region, with India leading with 9%, followed by Vietnam at 7.0%, and Indonesia at 6.1%. Singapore, one of APAC’s key financial hubs, is expected to maintain its salary increase budgets at 4%, which is consistent with trends since 2024. Other major economies such as Australia (3.5%), Japan (3.0%), and South Korea (4.3%) show more conservative projections.
Aside from base salary adjustments, the report also highlights attempts by employers to adapt their compensation programmes against rising operating costs and labour pressures. These include conducting compensation reviews, implementing targeted base salary increases and retention bonuses. Non-monetary initiatives, such as training opportunities and health and wellness benefits, are also gaining traction for potentially impacting overall compensation and even future promotion salary increase opportunities.
“Employers are hedging against rising labour costs by proactively deepening investments in areas such as career development, health, and wellbeing. These actions have significant potential for long-lasting benefits to help address companies’ mid- to longer-term talent needs and establish a resilient workforce as they continue to traverse these unpredictable times,” added Goh.
According to WTW, half of the companies surveyed have no immediate plans to significantly change their compensation plans. Of those considering changes, approximately a quarter are looking towards incentives or modifying performance goals to account for volatility.
“Employers in the region are concerned about losing critical talent, with change management, talent attraction, and employee experience being significant issues,” said Shai Ganu, Managing Director and Global Leader, Executive Compensation and Board Advisory at WTW. “These adjustments aim to align compensation with the new economic realities and maintain employee motivation and performance.”
The Salary Budget Report is based on responses from approximately 32,000 companies across 168 countries worldwide, including those in the Asia Pacific, from April to June of 2025.