The survey found Malaysian businesses are budgeting an average salary increase of 4.8 percent for 2026. The life sciences and medical devices sector is set to lead with the highest projected salary growth followed by manufacturing and retail.
The survey was conducted from July to September 2025 and analysed the salary adjustments and employee turnover rates of more than 700 businesses across Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.
| Country | Salary Increase 2024 (%) | Salary Increase 2025 (%) | Projected (Budgeted) Salary Increase 2026 (%) | Attrition in 2023 (%) | Attrition in 2024 (%) | Attrition in 2025 (%) |
| Overall | 5.4 | 5.4 | 5.3 | 18.4 | 16.9 | 17.5 |
| Indonesia | 5.9 | 5.7 | 5.9 | 18.1 | 17 | 15 |
| Malaysia | 5 | 4.8 | 4.8 | 18.6 | 15.3 | 18.2 |
| Philippines | 5.4 | 5.3 | 5.2 | 20 | 19.3 | 20 |
| Singapore | 4.3 | 4.3 | 4.3 | 19.6 | 17 | 19.3 |
| Thailand | 4.7 | 4.6 | 4.7 | 16.8 | 16.6 | 17.2 |
| Vietnam | 7.2 | 7.7 | 7.1 | 17 | 16.3 | 15 |
Rahul Chawla, partner and head of Talent Solutions for Southeast Asia at Aon, highlighted the unique challenges and opportunities in Malaysia's current macroeconomic climate, saying, "With rising capital investment in technology and strategic sectors, Malaysian organisations are prioritising retention of top talent and highly skilled employees. As companies navigate increasing compensation costs amid a dynamic economic environment, balancing agility and cost control is essential. Forward-looking firms are leveraging real-time market insights and comprehensive rewards strategies to remain competitive and attract the best talent."
Malaysia's attrition rate stands at 18.2 percent, ranking among the top three countries in the region. The Philippines leads attrition rate with a projected rate of 20 percent, followed by Singapore at 19.3 percent. Attrition rates in Malaysia also vary across industries, with retail and hospitality at 22.2 percent followed by manufacturing and technology at 17.7 percent and 17.1 percent, respectively. This increase in attrition reflects a competitive labour market where talent mobility is high, driven by modest salary growth and evolving workforce expectations. With salary budgets projected to remain at 4.8 percent for both 2025 and 2026, organisations face challenges in retaining talent amid rising opportunities across the region. Broader macro factors such as global economic uncertainty, cost optimisation strategies and the surge in cross-border hybrid work models could further amplify voluntary turnover.
Amid global economic uncertainty, inflationary pressures and geopolitical tensions, Malaysian firms remain cautiously optimistic. The study found that 52 percent of Malaysian organisations forecast a positive outlook, while 28 percent anticipate challenges. Looking ahead, 61 percent of firms see no change in headcount while 28 percent plan modest increases between five and-20 percent.
Human resource priorities are shifting with 48 percent of companies optimising workforce size, while 43 percent are focused on hiring top quality talent to address talent shortages. The most in-demand roles include information technology (28 percent), artificial intelligence/machine learning (26 percent), cyber security (26 percent), sales (25 percent) and engineering (23 percent), reflecting a sharp pivot toward digital and risk-focused capabilities. This surge in demand, especially for artificial intelligence/machine learning and cyber security signals a strategic focus on securing future-critical skills in an increasingly competitive market.
Rachel Jayaprakash, head of Talent Solutions for Malaysia at Aon, emphasised, "Malaysian organisations face significant hiring and retention challenges, yet many aim to sustain or expand their workforce. Robust data and industry benchmarks are now more critical than ever. By understanding what the market is paying for key roles, companies can implement total reward strategies that go beyond base pay. A comprehensive approach, which includes competitive compensation, benefits and targeted incentives, will enable Malaysian firms to attract and retain top talent, engage high performers and build resilient, future-ready workforces."
More information about Aon in Asia can be found here.
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Disclaimer
The information contained in this document is solely for information purposes, for general guidance only and is not intended to address the circumstances of any particular individual or entity. Although Aon endeavours to provide accurate and timely information and uses sources that it considers reliable, the firm does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of any content of this document and can accept no liability for any loss incurred in any way by any person who may rely on it. There can be no guarantee that the information contained in this document will remain accurate as on the date it is received or that it will continue to be accurate in the future. No individual or entity should make decisions or act based solely on the information contained herein without appropriate professional advice and targeted research.
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