Southeast Asia salary increases stabilise at 5.2% for 2027: Aon

Organisations across Southeast Asia are budgeting for average salary increases of 5.2% in 2027, up from 5% in 2026, as employers continue to navigate skills shortages, inflation and changing talent needs, according to Aon’s 2026 Salary Increase and Turnover Study for Southeast Asia.

Indonesia and Vietnam are expected to record the highest salary increases in the region at 5.5% and 6.7%, respectively. Salary budgets vary across markets and industries, reflecting differences in economic conditions, labour market dynamics and sector-specific demand.

Salary budgets vary across markets

Singapore is expected to see the highest salary increase in the retail and hospitality sector at 4.8%. The life sciences and medical devices sector is projected to lead in Malaysia at 5.2%, Thailand at 5.3% and Vietnam at 7.7%.

In the Philippines, consulting, business and community services are expected to record the highest salary increase at 6.7%.

“Boardrooms face important decisions on how to allocate investment in technology and talent while navigating an uncertain environment fraught with emerging and interconnected risks,” said Rahul Chawla, Partner and Head of Talent Solutions, Southeast Asia, Aon. 

“Persistent inflation and ongoing skill shortages are directing investments toward the roles and skills that will drive returns on their broader business investments. While competitive pay remains important, organisations must also consider the broader employee value proposition including growth opportunities, purpose and career development to create opportunities for long-term organisational growth,” Chawla added.

Employee turnover remains elevated

Despite continued investment in talent, employee turnover remains a challenge across Southeast Asia, with attrition rates remaining in double digits across all six markets covered by the study.

Malaysia recorded the highest attrition rate at 17.4%, followed by the Philippines at 17.3% and Singapore at 16.8%. 

At an industry level, consulting, business and community services recorded the highest attrition rate at 21.5%, followed by manufacturing at 17.9% and financial services at 17.7%.

Employers target critical skills

Aon’s 2026 Southeast Asia Talent Pulse Survey found that organisations are reallocating talent towards strategic business priorities.

Among companies planning to expand their workforce, 50% are focusing headcount growth on front-office roles, including sales and revenue-generating positions, while 35% are targeting engineering and technology roles. Organisations planning to reduce headcount are mainly targeting back-office operations roles.

Data and AI roles were the most in-demand, cited by 64% of organisations, followed by front-office roles at 56%, cybersecurity at 44%, software and cloud roles at 43% and project and programme management at 41%.

“Workforce decisions have never been more complex, making access to reliable and defensible data essential for organisations,” said Belinda Armenta, Head of Talent Data Solutions, Asia Pacific, Aon. 

“With AI accelerating change across industries, organisations are seeking deeper intelligence beyond historical benchmarks. Insights into compensation trends, workforce movements and talent risks enable leaders to make more informed decisions, helping them attract, retain and plan for the talent they need,” Armenta elaborated.

Salary and workforce planning come together

The study analysed salary increase budgets and employee turnover rates among more than 1,200 businesses across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam between July and September 2026.

The findings point to a workforce environment in which employers are balancing salary budgets with persistent attrition and demand for specialised skills, while directing hiring towards roles considered critical to business growth and technology adoption.