Pay Raise Expected for Malaysians in 2023
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In 2023, Malaysian employees can anticipate a boost in their pay, yet it is still being determined if it will reach pre-pandemic rates or have a sufficiently positive effect. Inflation is the main element with the most influence on real salary growth.
In addition, there are differences in wage increases for workers based on their level of expertise and position within the organisation. Even employers acknowledge that wages in Malaysia are still relatively low, but what's more alarming is that those who earn more will gain the most from any pay raise.
According to ECA International, real salaries will increase by 2.2% in 2023.
Real salary growth for employees in Malaysia is predicted to reach 2.2% in 2023, up from 1.6% in 2019. Malaysia is also one of the top ten nations anticipated to experience the greatest increase in real salary in 2023, according to the most recent Salary Trends Report from personnel management data and software company ECA International.
The following ten countries, most of which are Asian countries, top ECA International's list of anticipated real pay gains for 2023, according to a statement:
- India (4.6%)
- Vietnam (4.0%)
- China (3.8%)
- Brazil (3.4%)
- Saudi Arabia (2.3%)
- Malaysia (2.2%)
- Cambodia (2.2%)
- Thailand (2.2%)
- Oman (2.0%)
- Russia (1.9%)
For your information, real salary, or actual income, is the amount employees earn after accounting for inflation. Alternatively, it's the nominal wage growth without the inflation rate.
ECA International also pointed out that income increases are expected to suffer from the steep rise in global inflation for the second year in a row.
In 2023, the survey predicts that workers will face another challenging year. Only a third of the nations polled (37%) are anticipated to achieve real-term salary rises, although this is an improvement over the 22% that did so this year.
The most recent Salary Trends Report from ECA International was created using data gathered from more than 360 global corporations across 68 cities and countries during August and September 2022.
A gradual recovery of salaries?
According to Benedict Weerasena, director of the independent research institute Bait al-Amanah, the increase is more of a steady recovery of salaries. He emphasised that Malaysia has yet to recover to its pre-pandemic condition.
Additionally, circumstances have compelled businesses to increase pay. The Sunway University business school's Yeah Kim Leng agreed that the labour shortage is crucial in understanding these pay rises.
He claimed that employers had to raise pay due to the need to fill openings.
Meanwhile, Mercer predicts a median 5% pay raise.
As per American asset management company Mercer, employees in Malaysia may anticipate a median 5% pay raise in the upcoming year.
Mercer reported that between April and June of this year, 637 organisations, of which 98% are multinational corporations (MNCs), across 17 industries in Malaysia were polled for its Total Remuneration Survey (TRS) 2022.
According to Mercer, this rebound to the pre-pandemic levels seen in 2019 represents an uptick in employer optimism towards their own companies and the state of the market.
The report stated that Malaysia's GDP is expected to increase by 6.4% this year, reaching pre-pandemic rates of 4.4% in 2019.
Mercer said Malaysia's median wage increase is also higher than the region's average of 4.4%.
According to the report, estimates range from 7.1% in Vietnam to 2.2% in Japan, the lowest in the region, reflecting a disparity in wage progression among emerging and developed economies across Asia.
Pay raise among industries
Retail and consumer goods are predicted to experience the most gains in pay increases of 5% in 2023, up from 4.5% and 4.6%, respectively, in 2022, according to Mercer's analysis of the industries polled.
High-tech and shared services and outsourcing (SSO) industries both keep their 5% growth from this year, indicating the relative stability of both sectors in the face of supply chain problems and inflationary pressures.
Based on Mercer's mid-2022 prediction, employees outside of the high-tech sector should likewise anticipate bigger bonus payouts this year.
The report stated the retail sector is anticipated to experience the largest increase, to 12.6% from 8.1% in 2021, followed closely by the consumer goods sector, which will see a rise to 16% from 13.7% the year before.
Companies will be more cautious in hiring.
The poll found that businesses are more cautious about their recruiting plans for 2023.
The report stated 1% of the organisations surveyed (vs 3% in 2022) aim to reduce their headcount in 2023, compared to 30% of the organisations polled (vs 39% in 2022).
For most businesses, voluntary attrition remains below pre-pandemic levels. However, it is slowly increasing, especially in industries like SSO, high-tech, and chemicals, where skilled labour is still in great demand.
Employee engagement should be focused on as a retention strategy in addition to a robust compensation plan to satisfy demands including physical and emotional health, work-life balance, career advancement, and more.
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