Southeast Asia salary increases to hold at 5.2% in 2027: Aon report

Organisations across Southeast Asia are budgeting for average salary increases of 5.2 per cent in 2027, marginally higher than the 5 per cent increase recorded in 2026, as employers continue to balance talent investment with persistent skills shortages and shifting business priorities.

According to Aon’s 2026 Salary Increase and Turnover Study for Southeast Asia, Indonesia and Vietnam are projected to record some of the region’s highest salary increases at 5.5 per cent and 6.7 per cent respectively. 

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

Vietnam leads salary growth

Vietnam is projected to record the highest salary increase in the region at 6.7 per cent in 2027, followed by Indonesia at 5.5 per cent.

The Philippines is expected to record a 5.3 per cent increase, while Malaysia and Thailand are projected at 4.8 per cent and 4.6 per cent respectively. 

Singapore is expected to see the lowest increase among the markets covered at 4.1 per cent.

At an industry level, salary budgets also vary across markets. Retail and hospitality is expected to record the highest increase in Singapore at 4.8 per cent. 

Life sciences and medical devices leads in Malaysia at 5.2 per cent, Thailand at 5.3 per cent and Vietnam at 7.7 per cent, while consulting, business and community services leads in the Philippines at 6.7 per cent.

Attrition remains elevated

Despite continued investment in talent, employee turnover remains a challenge across Southeast Asia, with attrition rates remaining in double digits across all markets surveyed.

Malaysia recorded the highest attrition rate in 2026 at 17.4 per cent, followed by the Philippines at 17.3 per cent and Singapore at 16.8 per cent. Thailand recorded 16.4 per cent, Indonesia 15.5 per cent and Vietnam 16.2 per cent.

By industry, consulting, business and community services recorded the highest attrition rate at 21.5 per cent, followed by manufacturing at 17.9 per cent and financial services at 17.7 per cent.

Hiring shifts to strategic roles

Aon’s 2026 Southeast Asia Talent Pulse Survey also points to a more selective approach to workforce expansion, with organisations directing headcount towards roles linked to revenue generation, technology and strategic capabilities.

Among companies planning to expand headcount, 50 per cent are prioritising front-office roles, including sales and revenue-generating positions, while 35 per cent are focusing on engineering and technology roles.

For organisations planning to reduce headcount, cuts are expected to be concentrated mainly in back-office operations.

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

Pay competes with skills demand

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

“Persistent inflation and ongoing skill shortages are directing investments toward the roles and skills that will drive returns on their broader business investments,” he added.

“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,” he further mentioned.

The findings indicate that salary budgets are only one part of employers' broader talent strategies, as organisations increasingly differentiate investment based on skills, roles and business priorities.

Workforce data gains importance

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

She added, “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.”

Aon conducted its 2026 Salary Increase and Turnover Study for Southeast Asia between July and September 2026, covering businesses across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.