Global advisory, broking, and solutions company WTW said that companies in Malaysia are likely to increase their budgets for employee salaries by 5% in 2023. Revealed in its Salary Budget Planning Report 2022, the increase is attributed primarily to the competitive labour market conditions and inflationary pressures brought on by the rising cost of living.

According to the managing director and head of work rewards business (South Asia, Asean, and Malaysia) for WTW, Tan Juan Jim, Malaysian companies have taken steps to increase their salary budgets through various strategies in response to global salary budget trends. These include optimising total rewards for their employees, as well as adjusting prices where relevant.

“Companies are taking multiple actions, which include enhancing employee experience and modifying their compensation programme, to address the labour shortages issue in Malaysia. Some companies are also making more frequent salary increase adjustments (and) in fact, 40% of organisations are even considering biannual salary increases to attract and retain talent,” Tan further commented.

Tan also noted that companies have been compelled to review their people strategies due to compounding economic conditions, such as the current high inflation rates and the uncertainty of how long-lasting it would be. One popular method involves tapping into non-monetary benefits for employees, including telehealth services.

“With significant risks in the local economy, continued high inflation and employers grappling with talent supply challenges, organisations must be more creative to address attraction and retention challenges. For instance, information technology skills are one of the most sought after by companies now, with 71% of the organisations reported experiencing problems to retain and attract digital talents,” Tan shared, adding that companies can consider addressing these challenges by adopting pay-for-performance models, or hiring candidates with higher-order thinking (HOT) skills.

Similarly, WTW Malaysia’s associate director of rewards and data intelligence, Michael Ng also echoed Tan’s belief that many companies will seek to improve their employee remuneration packages by offering alternative or new well-being programmes. “Other than salary increases, more than 60% of companies are taking non-financial measures, offering more workplace flexibility to address the competitive labour market and inflation pressures,” he said.

Ng also foresees that local companies will rely on ongoing discussions of median salary increase expectations to guide their retention and attraction strategies. He further explained that employees will likely only gain a 1% real wage increase, calculated based on an expected 5% overall increase and an inflation rate of 4%. Given these figures, he believes that wages can actually be increased further.

Additionally, Ng stressed that two-thirds of organisations – especially those in the digital, production, and engineering fields – are having trouble attracting and retaining employees. “Since three years ago, employers find that it is getting harder to retain employees in anticipation of 2023, and learning from the pandemic and various uncertainties surrounding the market, employers had learned new ways of attracting and retaining employees,” he said.

On the topic of in-demand jobs, Ng stated that many companies are seeking to fill technology-related roles, including business analysts, data engineers, machine learning engineers, business intelligence analysts, and customer intelligence analysts. This trend is likely to continue in 2023 as Malaysia’s digital economy expands, he said.

(Source: The Sun Daily)

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• Michael Ng
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• Tan Juan Jim
• Willis Towers Watson (WTW)
• WTW Salary Budget Planning Report