While salary increases were at a lower rate in 2021, these figures are expected to normalise to pre-pandemic levels in 2022, as companies settle into new and agile workforce models.
2021 saw a drop in salary increases across industries in Malaysia, Singapore, and Thailand in 2021, following the pandemic's impact on organisations' talent strategies, a new study by Aon has revealed.
According to the Salary Increase and Turnover Study, conducted from June 2020 to June 2021, salaries increases in 2021 were at about 4.5% in Malaysia and 4.4% in Thailand, down from 4.7% and 4.9% respectively in 2020. Over in Singapore, salary increases in 2021 were around 3.3%, down from 3.8% in 2020; while in Indonesia it was 6.5% (down from 7.5% in 2020), and in Vietnam it was 7.5% (2020: 8.5%).
At the same time, bonus payouts, which were "relatively insulated in 2020", also dropped between 20-25% across the Southeast Asian region.
Diving into sector-specific data, the study revealed that in financial services, the consumer banking industry saw minimal salary increases due to "prevailing macro-economic conditions and the business performance of banks." However, private banking saw continued salary growth on the back of continued wealth creation in the region and the need for sophisticated financial planning. Similarly, the life sciences and medical devices industries saw salary increases in Malaysia (4.6%), Singapore (3.6%), and Thailand (5%).
In contrast, retail, hospitality, and professional services continue to face headwinds; for example, the Singapore market saw a salary increase of just 3% in the consulting and professional services industry.
Keeping the above in mind, as organisations settle into new and agile workforce models, the study noted that compensation policies are expected to normalise to pre-pandemic levels in 2022. In particular, salary increases in Malaysia and Thailand are forecasted to recover to 4.9% each, 3.8% in Singapore, 6.5% in Indonesia, and 7.8% in Vietnam.
Voluntary turnover could increase in 2022
In further findings, the study noted that voluntary turnover in 2021 either remained mostly flat, or declined:
- Malaysia: from 10.6% in 2020, to 8.7% in 2021
- Singapore: from 11.3% in 2020, to 10.8% in 2021
- Thailand: from 11.4% in 2020 to 8.6% in 2021
- Indonesia: from 11.7% in 2020 to 5.2% in 2021
- Vietnam: from 15.3% in 2020 to 12.2% in 2021
However, with the economy looking poised to recover, these rates could increase following the current downturn, the study highlighted.
Lead image / Aon