Survey: Median 4.5% Increase in Overall Salaries Next Year

According to Mercer's Total Remuneration Survey (TRS) 2021, Malaysian companies expect a median 4.5% increase in overall salaries in 2022.
Between April and June 2021, 544 organisations across 10 industries in Malaysia were surveyed, with 97% of them being multinational corporations (MNCs). With the exception of companies that have enforced salary freezes, it is a 0.4% increase over this year's 4.1%, but still below the 5% in 2019.

 

Recovering economy to pave way for salary increase

Despite the fact that Malaysia's median wage increase is lower than the Asia-Pacific average of 5.4%, it demonstrates confidence in the country's economic recovery, with the GDP expected to grow by 4.5% this year and return to pre-pandemic levels of 4.4% in 2019.

Pakistan (9%) has the biggest pay growth in the region, while Japan's forecast for 2022 is the lowest at 2.3%.

Koay Gim Soon, Mercer's Career Business Leader in Malaysia, stated that while the rebound in wage increments suggests that employers are confident in Malaysia's gradual reopening to business, it is still lower than the levels before the pandemic. 

He added that Mercer finds distinctions in the obstacles faced and the rate of recovery for MNCs and small to medium enterprises (SMEs) when it comes to financial stress.

Despite the fact that MNCs have had the resources to thrive thus far, they now need to focus on issues such as employee engagement and productivity, as workers are staying put and expecting more than just salary. On the contrary, he said that SMEs must stay focused on key business priorities and maintain competitive compensation packages to recruit and retain the necessary staff to keep their businesses afloat.

Among the sectors surveyed, the Lifestyle Retail industry is anticipated to enjoy the largest wage increase in 2022, rising to 4.2% from 3% in 2021. The Life Sciences industry increased by 0.7% to 5%, followed by the Consumer Goods and Chemical industries, which both increased by 0.5% to 4.5% and 5%, respectively.

Across Asia, Pakistan (9%) reported the highest wage increase while Japan’s 2022 forecast is the lowest at 2.3%.

Better bonus payout

Employers in Malaysia have also upped the average bonus payout for 2021 to 2.2 months, up from 2.1 months in 2020, with the Life Sciences and Shared Services businesses receiving the highest payout of 2.4 months.

When it comes to industry salary trends, Koay said that businesses in the Life Sciences and Chemicals field have typically been more resilient to economic volatility, which possibly explains why they are able to make salary increments and incentive payouts on a consistent basis. He added that salary increases in the Lifestyle

Retail and Consumer Goods industries are a promising sign that consumer spending is picking up on Malaysia's road to normalcy.

According to the poll, 20.1% of companies aim to increase personnel, while 1.9% intend to reduce headcount, down from 5.7% in 2021. Involuntary attrition has decreased to 1.6% in the first half of 2021, down from 3.3% in 2020 and 3.6% in 2019, indicating that businesses are better positioned to retain their staff and keep their operations viable.

Koay said that the resumption of economic and social activity in mid-August resulted in an increase in hiring, lowering the unemployment rate. He expected a prolonged recovery through 2022 for Malaysia's job market. 

According to Koay, as employers prepare for growth, they will need to do more to compete for the talent they require. They must embrace hybrid work arrangements and reconsider their employee value offer, which includes compensation.

 

The importance of benefits

With improved business sentiment, the Malaysian government just announced new guidelines to expand flexible work arrangements to all industries, which could assist businesses in continuing to operate and providing better benefits to their employees, particularly during the Movement Control Orders (MCO).

Mercer's CEO for the South East Asia Growth Markets, Godelieve van Dooren, said that many organisations had to rethink their entire employee value proposition as a result of the pandemic and as workplace flexibility is becoming a norm for employers, companies should concentrate on creating a working environment that meets both personal and business needs.

Apart from compensation, she cited some examples of how employers can increase employee engagement and maintain a healthy and productive workforce, such as:

• Hybrid training and development programs,

• Enhance benefits programmes for hybrid working, and

• Provide on-the-go health and mental wellness support.

 

Source: The Sun Daily

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