Malaysian companies are expected to increase employee wages by five percent

KUALA LUMPUR: Companies in Malaysia are expected to raise overall salaries by five percent for executive, professional and support staff this year, according to a survey conducted by leading global consulting, brokerage and solutions firm, WTW.

Although this year’s projected increase is lower than the 5.6 percent in 2023, WTW said average wage increases have continued to increase steadily over the past few years.

“The same trend was observed in various industries in the country this year.

“However, inflationary pressure and concerns about the tight job market continue to affect factors other than the salary increase budget,” they said in a statement.

WTW said that although the rate of inflation has slowed down from the highest levels in recent years, the job market in Malaysia is undergoing changes.

“Voluntary additions and reductions continue to increase to reach a high of 18.5 percent last year compared to 16.5 percent in 2022. This trend looks set to continue in 2024.

Head of WTW’s Employee & Rewards Division for Southeast Asia and Malaysia, Tan Juan Jim said employers in this country will continue to face significant talent challenges including efforts to attract and retain important talent.

“Employers need to remain focused on balancing the entire reward package they offer, including both financial and non-financial aspects to remain competitive and in line with the needs and demands of employees,” he said.

Meanwhile, the WTW survey revealed industries such as banking, insurance, technology, media & gaming and shared services & outsourcing hired more millennial and Gen Z workers in the past year.

According to the survey, since 2020, the Gen Z workforce in Malaysia has grown rapidly with a year-on-year increase of 50 percent of the total workforce.

“By 2025, WTW expects that the millennial generation and Gen Z will make up more than 70 percent of the workforce in this country,” he said.

Juan Jim said, the traditional employment model is falling behind as workers now have options in the gig economy and the ‘passion economy’ or an economy based on interests such as the digital industry.

He said, ‘passion economy; or typically related to digital is built on development where the purpose and provision of alternative ways to make money, innovative paths towards professional fulfillment and unprecedented career opportunities to the workforce of the future.

“In this economic context, job security is no longer the main focus, instead understanding the emerging Gen Z group of workers becomes important,” he said.

He said organizations that move towards providing greater work flexibility, including offering remote, in-office or hybrid work options will attract and retain more talent.

“This work stream offers Gen Z more options to have a variety of side jobs while maintaining their traditional jobs,” he said.

Juan Jim said, the increase in the Gen Z population presents three possible challenges to the corporate workforce in Malaysia.

“It includes young talents who are exploring job opportunities abroad such as Singapore and West Asia.

The education aspect that has been lagging behind due to the effects of the pandemic for two years will also have an impact on the workforce, and even the emergence of technology-driven career options.

“They are also faced with a situation where Gen Z is always looking for new positions to meet their needs for flexibility, control of life and income scale through their own efforts, as well as looking for work that is geared towards life goals,” he said.

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