Singapore’s salary growth is projected to be modest in 2025, hovering at around 4.4%, according to Aon’s 2024 Salary Increase and Turnover Study.
This rate is the lowest in Southeast Asia, with neighbouring countries like Vietnam and Indonesia expecting considerably higher increases.
The study, which took place between July and September 2024, examined the salary adjustments and employee turnover rates of over 950 companies in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
Here’s a breakdown of the key findings from the survey, as well as what it means for both employers and workers.
The region’s slowest salary growth
Based on Aon’s survey, Singapore and Thailand rank at the bottom for budgeted salary increases in 2025, with Thailand just slightly higher at 4.7%.
While Singapore’s increase of 4.4% marks a steady pace, countries like Vietnam (6.7%), Indonesia (6.3%), and the Philippines (5.8%) are looking at stronger boosts.
These modest increases may be a reflection of the balancing act many Singaporean employers are trying to maintain.
As Rahul Chawla, head of Talent Solutions for Southeast Asia at Aon, explained, “Employers today are in an unenviable situation of balancing the rising cost of compensation with the distinct challenge of attracting and retaining top talent.”
Industry differences in salary increases
Salary growth is not uniform across all industries. In Singapore and the wider region, the tech and manufacturing sectors are forecasted to lead in salary increases at 5.8%, while the retail, consulting, and life sciences sectors are budgeted at 5.4%.
By contrast, industries like transportation, financial services, and energy expect lower increases, with transportation projected at just 4.1%.
For Singapore’s tech sector, specifically, this anticipated growth aligns with high demand in roles related to cybersecurity, artificial intelligence, and machine learning.
Other in-demand roles include engineering and sales, which continue to challenge recruiters due to skill shortages. This demand has led to year-on-year increases in headcount for specific roles, with cybersecurity positions seeing a remarkable 160% surge.
A tight market for talent retention
The study also highlights that companies across Southeast Asia are facing difficulties in retaining employees, with Singapore feeling the strain.
In fact, 64% of companies report challenges in hiring or retaining talent. This has led to a streamlined approach, with many firms focusing on bolstering core teams through individual contributors rather than adding management layers.
Notably, while companies are only slightly increasing their workforce numbers, one in three firms is looking to expand headcount by up to 20% to meet demands.
Attrition rates and turnover
Employee turnover varies significantly by industry, with consulting and business services experiencing the highest attrition rates at 23%, followed closely by the life sciences (18.4%) and energy (18%).
On the other hand, sectors like retail show more stability, likely due to renewed consumer spending. The technology sector’s turnover rate remains steady at 15.1%, suggesting a cautious but consistent approach by firms in this field.
Involuntary turnover rates also shed light on industry trends. The consulting and business services sector leads here with a rate of 8.9%, a noticeable increase from 2023 when retail experienced the highest turnover at 9.5%.
This shift could indicate a broader realignment in talent strategy across various sectors, driven by economic conditions and evolving workforce needs.
Smart salary strategies in a cost-conscious climate
To address cost constraints, companies are adopting more targeted salary strategies. A significant trend is the reduction of new hire premiums, which now range between 1.3% and 8.2%, down from previous highs of 5.6% to 13.3%.
Employers are increasingly using real-time data and predictive analytics to navigate talent demands, helping them identify which skills command premiums and where cost savings are possible.
As Wan Hua Cheng, director of talent analytics for Southeast Asia at Aon, points out, “Companies are opting for targeted salary increases as they navigate uncertain times,” with a focus on essential roles and skills.
For roles in cybersecurity, AI, and risk management, demand remains high, and these positions are witnessing double-digit growth in compensation year-over-year.
-//-
For Singaporean workers, the takeaway is clear: While salary hikes may be modest, growth is still expected, particularly in high-demand sectors like tech, manufacturing, and consulting.
Employees in these fields may benefit from higher increases, reflecting the value of their skills in a competitive market. Meanwhile, those in sectors expecting smaller bumps could consider upskilling to stay competitive and explore opportunities in more dynamic roles.
As we move into 2025, the modest salary growth in Singapore may call for a shift in mindset for both employees and employers. In an environment of cautious optimism, flexibility, adaptability, and skill enhancement remain key for those aiming to make the most of a challenging yet opportunity-filled year ahead.
Featured Image Credit: iStock