Firms adopting cautious approach to pay rises in 2025: HR experts

Employees in Singapore could see salary increments ranging from 2 per cent to 5 per cent on average in the coming year, though the outlook varies across sectors, according to recent salary surveys by human resources (HR) firms.

- Sharon Salim

HR experts said companies are adopting a cautious approach to salary increment budgets in 2025.

"Companies are opting for targeted salary increases to navigate uncertain times," said Ms Cheng Wan Hua, director of talent analytics for South-east Asia at professional services firm Aon.

Aon said in a recent report that salary increase budgets in Southeast Asia are expected to "inch up marginally" in 2025 compared with 2024, highlighting the demand for talent.

Aon, which surveyed more than 950 companies in Singapore and five other South-east Asian countries, found that Singapore employees are poised to receive pay rises of 4.4 per cent, lagging behind places such as Indonesia and Thailand. The highest salary increase in the region is projected at 6.7 per cent in Vietnam.

Consultancy firm Mercer similarly expects employers in Singapore to offer a 4 per cent increase in employees' salaries.

Meanwhile, global talent firm Robert Walters said employees staying on with their current companies could see their salaries increase by 2 per cent to 5 per cent to align with inflation.

This outlook comes even as Singapore's growth is expected to slow in 2025.

The Ministry of Trade and Industry said on Nov 22 that Singapore's gross domestic product growth is projected to come in at 1 per cent to 3 per cent in 2025, lower than the full-year growth forecast of around 3.5 per cent for 2024.

A recent note by UOB Global Economics and Markets Research highlighted cautiousness among firms in trade-related sectors in terms of their hiring decisions for the first half of 2025.

This is observed in sectors such as wholesale trade, transportation and storage, and manufacturing, given significant uncertainties over the timing, extent and scope of US President-elect Donald Trump's proposed tariffs.