EMPLOYEES in Malaysia can look forward to a median 5% increase in their salaries next year – a return to the pre-COVID-19 pandemic level seen in 2019 that reflects growing optimism among employers about their business and overall market outlook.
This was the view of asset management firm Mercer following the launch of its annual Total Remuneration Survey 2022, which polled 637 organisations (of which 98% are multinational corporations or MNCs) across 17 industries in Malaysia between April and June this year.
In a statement, Mercer noted that Malaysia’s Gross Domestic Product (GDP) is estimated to grow by 6.4% this year, exceeding the pre-COVID-19 pandemic level of 4.4% in 2019, while Malaysia’s median salary increment is also above the Asia-Pacific average of 4.4%.
Across Asia, the overall median salary increases reflect a divergence in pay progression between emerging and developed economies, with estimates as high as 7.1% in Vietnam to 2.2% in Japan, the lowest in the region.
Mercer Malaysia career business leader Koay Gim Soon said with Malaysia rebounding from the pandemic, companies, especially multi-national companies (MNCs), are more certain about the future and have begun ramping up their business activities to cope with increased demands.
“Nevertheless, larger firms will need to keep abreast of the latest reward trends and developments to ensure they have a relevant and reliable talent pool,” he said.
“Small to medium enterprises (SMEs), which have relatively fewer resources, on the other hand, need to double down on their business priorities while ensuring that their compensation and benefits packages are competitive in order to attract and retain the right talent.”
Across the industries surveyed, the retail and consumer goods industries are expected to see the biggest upturn in salary increments of 5% in 2023, up from 4.5% and 4.6% respectively in 2022.
Shared services and outsourcing (SSO) and high-tech industries, on the other hand, maintain their 5% increase from this year, signaling the relative stability of both industries amid inflationary pressures and supply chain issues.
Higher bonus payouts
Employees, except for those from the high-tech industry, can also expect higher bonus payouts this year, based on Mercer’s mid-2022 forecast.
The retail industry is expecting the biggest jump to 12.6%, from 8.1% in 2021, followed closely by the consumer goods industry with an increase to 16% from 13.7% the previous year.
On industry salary trends, Koay said the higher projected salary increments and bonus payouts for the retail and consumer goods sectors are underpinned by strong consumer spending and the economy reopening.
“However, employers are also keeping a close eye on global headwinds, including inflation and supply chain disruption, which may dampen growth in the year ahead,” he said.
“Hence, the retail and consumer goods industries, despite recording the highest increases from 2021 to 2022, remain the most conservative in their forecasted bonus payouts.”
Meanwhile, although the total unemployment rate has returned to pre-pandemic levels this year, Mercer’s survey also found that companies are taking a more cautious approach in their 2023 hiring intentions: 30% of organisations surveyed (versus 39% in 2022) intend to increase their headcount, while 1% (versus 3% in 2022) plan to decrease their headcount in 2023.
“Voluntary attrition is still below pre-pandemic levels for most industries, but gradually rebounding, particularly industries such as SSO, high tech and chemicals where skilled talent remains highly sought after,” Koay explained.
He added that while a robust compensation strategy remains critical, employee engagement should also be prioritised as a retention strategy, especially to address employees’ needs such as physical and mental well-being, work-life balance and career progression.
According to a Mercer Pulse Survey conducted earlier this year, among the key drivers of employee turnover this year was dissatisfaction with their current pay and the ability to get higher salaries from other companies (77%); burnout and exhaustion (36%) and the lack of desired flexible work arrangements (31%). – Nov 13, 2022
