Mercer’s Total Remuneration Survey predicts Indonesia’s salary increase to rise in 2020
- Overall salary increase for Indonesia is forecasted to increase to 7.6% across industries (compared to 7.2% in 2019)
- The hiring trend in Indonesia is expected to slow down with 36% of organizations planning to add headcount compared to 43% in 2019
Jakarta, January 2020 - Mercer announced the results of its annual ‘2019 Indonesia Total Remuneration Survey,’ a study which identifies key remuneration trends and makes hiring and pay increase predictions for 2020. According to the findings, the 2020 salary increase across key industries is forecast to grow to 7.6% and the inflation rate is also projected to increase to 3.3%1 (from 2.9% in 2019).
Figures and forecasts are based on the Total Remuneration Surveys - Mercer’s flagship annual compensation and benefits benchmarking study that identifies key remuneration trends and predicts hiring and salary increase, with participation increasing to 569 companies this year in Indonesia across various industries (compared to 545 companies in 2018). 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.
Hiring trends
The hiring trend in Indonesia in 2020 is expected to slow down with 36% of organizations planning to add headcount compared to 43% in 2019. Considering the turnover and expansion rate, there will be 52,000 employees circulating in-out organizations. The top industries with the most companies expanding their workforce are the financial services and high tech industries.
“Indonesia has about 180 million in the workforce in 2019, with 63 million aged 20 to 35 years old. At the same time, the digital economy is thriving across the major SEA countries and Indonesia is leading. These key trends will continue to shape our economy into the future,” said Astrid Suryapranata, Career Business Leader of Mercer Indonesia.
“Mercer found that there are emerging jobs in the market, including in the areas of digital/internet marketing, e-commerce/online shopping marketing, data analytics and business intelligence, cloud infrastructure as a service (IAAS), robotic process automation configuration and programming engineering, and science (R&D analytics and bio informatics)”, she added.
Across industries, the voluntary attrition rate is at 7% in 2019. The financial services industry in Indonesia has the highest voluntary turnover rate at 14%. In 2018, the full-year attrition rate stood at 8%, with the financial services industry also having the highest voluntary turnover rate of 12%.
While the top reasons cited for employees leaving their organization in Asia varies, the top three reasons for employees leaving their organization are competitive pay, manager interaction, and lack of a clear career path and job security. [Source: Mercer Asia Pulse Survey 1H 2019 and 2019 Global Talent Trends Study].
Shift to agile rewards
As new roles are created and existing roles change with automation and AI, it is becoming more difficult to keep up with employee pay expectations and market values. According to Mercer’s 2019 Global Talent Trends Study, the number 1 workforce rewards priority is offering more diverse rewards. The good news is that HR’s priorities reflect what employees are asking for, both HR and employees agree that offering a wider variety of incentives and differentiating rewards for high performers will make a difference. To truly align to the business, investments in rewards should reflect a company’s strategic focus. In many cases, this means taking a step away from market norms and moving towards more differentiated offerings to satisfy both changing employee needs and the demand for new skills. Leading firms are focusing on the overall pay experience and expanding the focus beyond base pay to include career growth, incentives, and recognition.
Puneet Swani, Senior Partner and Career Business Leader for the International Region at Mercer said, “As the pace of change accelerates and we enter into this new world of work, companies should rethink how they can be future fit by putting their people at the heart of the change. Whether embracing digitalization, building competencies and skills needed for future competitive advantage or creating the right work environment and culture, changing the way organizations invest in their employees will yield a greater return for the business far into the future.”
For more data and insights from the Indonesia 2019 Total Remuneration Survey please see here.