Higher salary increments expected in 2022 as confidence in Malaysia’s economic recovery grows: Mercer
Mercer’s Malaysia Total Remuneration Survey 2021
Higher salary increments expected in 2022 as confidence in Malaysia’s economic recovery grows
Overall median salary increments projected to hit 4.5% in Malaysia next year, up from 4.1% in 2021
Lower involuntary attrition rates compared to pre-pandemic levels show improving business sentiment
Greater workplace flexibility and mental wellness support needed to successfully implement a hybrid future of work
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Higher Salary Increments Expected in 2022 as Confidence in Malaysia’s Economic Recovery Grows
Companies in Malaysia are forecasting a median 4.5% increase in overall salaries for 2022, according to the annual Total Remuneration Survey (TRS) 2021 by Mercer that polled 544 organizations – of which 97% are multi-national companies (MNCs) – across 10 industries in Malaysia between April and June this year. Excluding companies that have implemented wage freezes, this is a 0.4% improvement from 4.1% this year but still below the 5% in 2019.
Although Malaysia’s median salary increment is below the Asia Pacific average of 5.4%, it shows confidence in the country’s economic recovery, with its Gross Domestic Product (GDP) estimated to grow by 4.5% this year, returning close to pre-pandemic levels of 4.4% in 2019. Across the region, Pakistan (9%) reported the highest salary increase while Japan’s 2022 estimate is the lowest at 2.3%.
Koay Gim Soon, Mercer’s Career Business Leader in Malaysia, said, “While the rebound in salary increments shows that companies are confident of Malaysia’s gradual reopening to business, it is still lower than pre-pandemic levels. Faced with financial pressures, we see differences in the challenges faced and the pace of recovery for MNCs and small to medium enterprises (SMEs). Even though MNCs have had the means to survive thus far, they now need to look into areas like engagement and productivity, as employees have been staying put and expect more than just compensation. SMEs on the other hand, with lesser resources, must stay focused on key business priorities and keep their compensation packages competitive to attract and retain the right talent to keep their businesses afloat.”
Increase in salaries across all industries
Across the industries surveyed, the Lifestyle Retail industry is expected to see the biggest upturn in salary increment at 4.2% in 2022, up from 3% in 2021. This is followed by the Life Sciences (0.7% increase to 5%), as well as the Consumer Goods and Chemical industries, both up 0.5% to 4.5% and 5% respectively. In terms of variable bonuses, employers in Malaysia have also increased the average bonus payout to 2.2 months for 2021, compared to 2.1 months in 2020, with the Life Sciences and Shared Services industries seeing the highest payout of 2.4 months.
Commenting on the industry salary trends, Mr Koay said, “Businesses in the Life Sciences and Chemicals space are traditionally more resilient to economic uncertainty, which probably explains why they are able to make salary increments and bonus payouts consistently. The uptick in salary increments for the Lifestyle Retail & Consumer Goods industries is a positive sign that consumer spending is picking up on Malaysia’s road of returning to normalcy.”
Labor market recovery to gain momentum into 2022
Of all the survey’s respondents, 20.1% intend to add headcount whereas 1.9 % of employers specified they will reduce their headcount, down from 5.7% this year. Involuntary attrition for the first half of 2021 has dipped to 1.6%, compared to 3.3% in 2020 and 3.6% in 2019, indicating that companies are in a better position to retain their workforce and keep their businesses afloat.
Mr Koay said, “The reopening of economic and social activities in mid-August has seen a boost in hiring, resulting in a drop in the unemployment rate. We anticipate a sustained recovery in Malaysia’s job market going into 2022. Employers will need to do more to compete for the talent they need as they position themselves for growth. This includes embracing hybrid work arrangements and rethinking their employee value proposition, including compensation.”
Towards a robust hybrid working environment
With improving business sentiment, the Malaysian government also recently announced new guidelines to expand flexible work arrangements to all sectors that could help companies to continue economic activities and offer better benefits to their employees, especially during the Movement Control Orders (MCO) in the country.
Godelieve van Dooren, Mercer’s CEO for the South East Asia Growth Markets said, “The pandemic has forced many companies to rethink their entire employee value proposition. With workplace flexibility becoming the norm for employees, employers should focus on creating a working environment that meets both business and personal needs. Apart from compensation, hybrid training and development programs, enhancing benefits programs for hybrid working and providing on-the-go health and mental wellness support are great examples of how employers can raise employee engagement and maintain a healthy, productive workforce.”
 IMA Asia, APAC, Executive Brief, Oct 2021
 2021 Mercer Malaysia Total Remuneration Survey
About Mercer’s Total Remuneration Survey
The Total Remuneration Survey, Mercer’s flagship annual compensation and benefits benchmarking study, identifies current pay practices and benefits policies, as well as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulse surveys throughout the year to keep up with the impact of the rapidly changing business environment and compensation and workforce trends.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 81,000 colleagues and annual revenue of over US$19 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.