Salaries in Indonesia expected to increase in 2022 as economy rebounds, Mercer survey finds

 

  • Overall median salary increments projected to hit 6.5% in Indonesia next year, up from 5.3% in 2021
  • Employment recovery gathers pace, with one in three employers intending to add headcount
  • Greater emphasis on sustaining an optimized flexible work experience for employees

Indonesia, 21 December 2021 – Salary increments in Indonesia are on the rebound to pre-pandemic levels, with median pay increases projected to hit 6.5% in 2022. Excluding companies that have implemented wage freezes, it is a 1.2% improvement from 5.3% this year but still below the 6.9% in 2019. This is according to the annual Total Remuneration Survey (TRS) 2021 by Mercer that polled 533 organizations in Indonesia between April and June this year.

 

The projected pay increments reflect a positive outlook in the country’s economic recovery, with its Gross Domestic Product (GDP) estimated to grow by 3.5%1 this year and 5.6% in 2022. Indonesia’s median salary increase is above the Asia Pacific average of 5.4% and shows a divergence in pay progression between emerging and developed economies, with salary increases as high as 9% in Pakistan to 2.3% in Japan, the lowest in the region.

 

Yosef Budiman, Mercer’s Career Products Manager in Indonesia, said, “Widespread vaccination in key economic centers has restored public confidence and employers are shifting their focus to hire more permanent staff. As companies map out their talent strategies for 2022, the challenge is for them to create a new shape of work that recognizes their employees’ financial, health and career aspirations, in a tight labor market that is still short of skilled workers.”

 

Increase in salaries led by High Tech and Internet Companies

Across the industries surveyed, companies in the High Tech and Internet Companies sector are expected to see the highest median salary increment of 7.3%2 in 2022, followed by Chemical and Life Sciences (both 7%), and Consumer Goods (6.5%). While the Mining & Mining Services industry is likely to maintain pay increases next year, it is offering the highest payout of 3.6 months in terms of variable bonuses. For the other industries, employers in Indonesia have also increased the median bonus payout target to 2.3 months for 2021, compared to 2 months in 2020.

 

Commenting on the industry salary trends, Mr Budiman said, “Technology-related jobs are in high demand and competition for skilled labor in this field is stiff. Hence, it is not surprising to see tech companies offering higher salaries to mitigate the talent crunch. The Chemical and Life Sciences industries are typically more resilient to economic uncertainty whereas the Consumer Goods sector is making a comeback as the country’s consumption engine returns to high gear, especially with holiday spending in the coming weeks.”

 

Employment recovery gathers pace going into 2022

Going into 2022, one in three of the survey’s respondents in Indonesia intend to add headcount whereas only 4% of employers specified they will reduce their headcount, down from 10% this year. Involuntary attrition for 2021 also dipped to 5%, similar to what Indonesia saw before the pandemic, compared to 6% in 2020, indicating that business sentiment has improved and fewer companies are looking to trim headcount.

 

Mr Budiman added, “Employment recovery is gathering pace with the reopening of economic and social activities, and the future for Indonesia’s job market looks bright. Companies are in a better position to hire while employees have more options when they consider switching jobs in this climate. However, this also means that employers need to do more to compete for talent as they position their businesses for growth, including supporting workplace flexibility and taking a broader lens of benefits as part of their employee value proposition.”

 

Greater emphasis on sustaining workplace flexibility

Workplace flexibility has become the expectation for both employees and employers in Indonesia, with minimal impact on productivity, collaboration or employee development. According to Mercer’s 2021 Flexible Working Policies & Practices Report, 64% of companies in Asia Pacific have implemented full-time remote work while one in three plan to offer long-term remote working arrangements as part of their future of work policy.

 

Astrid Suryapranata, Mercer’s Indonesia Market Leader said, “COVID-19 tested our ability to bend the rules of where, when and how where we work. Employers should constantly review their employee engagement strategies, the impact of employee sentiments on culture and productivity, and the investments that are needed to sustain an optimized flexible work experience. Other than compensation, they can consider implementing hybrid training and development programs, enhancing employee benefits to support flexible work, as well as providing on-the-go health and mental wellness support programs, to turn the ‘new normal’ into an advantage and revolutionize the workplace.”

 

[1] IMA Asia, Regional Outlook, Oct 2021

[2] 2021 Mercer Indonesia Total Remuneration Survey

 

About Mercer’s Total Remuneration Survey

The Total Remuneration Survey, Mercer’s flagship annual compensation and benefits benchmarking study, identifies current pay practices and benefits policies, as well as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulse surveys throughout the year to keep up with the impact of the rapidly changing business environment and compensation and workforce trends.

 

For more data and insights from Mercer’s Indonesia Total Remuneration Survey 2021, please see here.

 

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 81,000 colleagues and annual revenue of over US$19 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.

 

1 IMA Asia, Regional Outlook, Oct 2021.

2 2021 Mercer Indonesia Total Remuneration Survey

 

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