New report also underscores the significant talent challenges amid a shifting labour market in the country
Employees across Malaysia can expect a five per cent increase in salaries this year as employers seek to remain competitive amid "significant talent challenges."
The latest compensation survey from WTW forecast an overall salary increase of five per cent for executives, management, and professional employees, as well as support staff.
The hike is slightly lower than the 5.6% actual increase in 2023, according to WTW, but the country's average salary hike continues to show signs of a steady increase of the last few years.
By industry, employees in BioPharma and Life Sciences can expect the highest salary increase this year amid WTW's projected hike of 5.2%. For other sectors, the projected salary increases are:
- Asset Management (4.9%)
- Banking (4.7%)
- Insurance (5.1%)
- Real Estate, Construction, and Engineering (5.1%)
- Oil and Gas (4.9%)
- Education (5%)
- High Tech (4.8%)
- Shared Services and Outsourcing (5.1%)
Significant talent challenges
These projected increases come as employers saw voluntary turnover and attrition increase to 18.5% in 2023, up from the 16.5% in 2022, according to Tan Juan Jim, Head of Work & Rewards, Southeast Asia and Malaysia, WTW.
"This trend looks set to continue in 2024. Employers in Malaysia will continue to face significant talent challenges including the attraction and retention of key talent," Tan said in a statement.
"They will need to stay focused on balancing the entire package of reward they offer, both monetary and non-monetary in order to remain competitive and align with employees' needs and wants."
Shifting labour market
Meanwhile, the report also noted that Malaysia's labour market is shifting - with millennials and Gen Z set to form more than 70% of the country's workforce by 2025.
According to WTW, this change brings about several challenges for employers, including:
- Young talents seeking opportunities abroad
- Setback in education by two years due to the pandemic and accelerated career options fuelled by technology
- Constant lookout for new positions by the same pool of younger workers to satisfy their needs for flexibility, control over their own destiny, and scalability of earning through their own efforts, and finding work that provide a sense of purpose
Tan said employers will need to leverage on analytics to understand their current and future workforce if they want to win the race for talent.
"Developing a compelling employee value proposition that encompasses a comprehensive view of total rewards, including both financial and personal well-being benefits, is important for employers in Malaysia to adapt to the unique attributes of the generational and future workforce," he said.
Rise of passion economy
The rise of the gig and so-called passion economy is also challenging the traditional employment model, especially with more Gen Zs entering the workforce, according to WTW.
"The passion economy is one where it is built around creators with a purpose and provides alternative ways of making money, innovative paths towards professional fulfillment, and unprecedented career opportunities to the future workforce," Tan said.
He underscored that understanding Gen Zs is critical in the context of passion economy, where job security is no longer the primary focus.
"Organisations that move towards providing greater work flexibility, including offering a choice of remote, onsite, or hybrid working will attract and retain more talent," Tan said.
"This trend of working offers Gen Z more options to have multiple side hustles while maintaining their traditional economy jobs."