KUALA LUMPUR (Nov 10): Employees in Malaysia can look forward to a median 5% increase in their salaries next year, said American asset management firm Mercer.

In its Total Remuneration Survey (TRS) 2022 released on Thursday (Nov 10), Mercer said it polled 637 organisations — of which 98% are multinational companies (MNCs) — across 17 industries in Malaysia between April and June this year.

In a statement on Thursday, the firm said this return to the pre-pandemic level seen in 2019 reflects growing optimism among employers about their business and overall market outlook.

It said Malaysia’s gross domestic product is estimated to grow by 6.4% this year, exceeding pre-pandemic levels of 4.4% in 2019.

Mercer said Malaysia’s median salary increment is also above the Asia Pacific average of 4.4%.

It said that 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’s career business leader for Malaysia Koay Gim Soon said that with Malaysia rebounding from the pandemic, companies, especially the MNCs, are more certain about the future and are 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.

“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,” said Koay.

Mercer said across the industries surveyed, the retail and consumer goods industries are expected to see the biggest upturn in salary increment of 5% in 2023, up from 4.5% and 4.6% respectively in 2022.

Shared services and outsourcing (SSO), and high-tech industries maintain their 5% increase from this year, signalling the relative stability of both industries amidst inflationary pressures and supply chain issues.

The firm said employees, except for those from the high-tech industry, can also expect higher bonus payouts this year, based on Mercer’s mid-2022 forecast.

It said 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.

Mercer said SSO is forecasting the highest payout of 20.3%, exceeding high-tech’s 19.9%, which reflects SSO’s growth potential in Malaysia leading to greater competition for talent.

The survey showed that while the total unemployment rate has returned to pre-pandemic levels this year, companies are taking a more cautious approach in their 2023 hiring intentions.

It said 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.

Koay said 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.

“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, career progression and more,” he said.