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Minimum wages are set to rise across some countries in South-east Asia as authorities in the region finalise their wage hikes for 2025, according to OCBC’s Global Markets Research report released on Thursday (Dec 12).  

That comes in spite of how regional policymakers have been “largely pragmatic” in raising minimum wages, said the report, which surveyed minimum wage plans for five economies in South-east Asia: Indonesia, Malaysia, Thailand, the Philippines and Vietnam.

Among these economies that are poised to welcome wage growth, Malaysia, Thailand and Indonesia have already pencilled in minimum wage increases to be implemented next year.

For Vietnam and the Philippines, which implemented such increments in July this year, wages are expected to stay level until the next round of potential negotiations takes place in 2025.

OCBC senior Asean economist Lavanya Venkateswaran highlighted that Asean’s minimum wage growth for 2025 is expected to surpass the anticipated rise in inflation for the year.

This will translate into real wage growth and bodes well for consumption.

“Real wages are likely to rise next year, which suggests that income growth is likely to remain supportive of broader consumption expenditures,” she said. 

However, the rise in minimum wages will also make competitiveness considerations “increasingly pertinent”, as Asean economies remain focused on drawing foreign direct investment (FDI) inflows.

The Asean-5 economies – Indonesia, Malaysia, the Philippines, Singapore and Thailand – have been attracting FDI inflows from across the world and “remain primed for further inflows”, geopolitical and tariff announcements notwithstanding, she said.

“An important consideration for minimum wage increases would be whether they are commensurate with productivity gains,” Venkateswaran said. 

With the minimum wage hikes planned for 2025, labour productivity gains will need to be larger than those of the past few years in order to keep up, she added.