Salaries To Increase By 4.5%, The Lowest In 5 Years, Says Mercer
That is, if your company wants to give you an increment.
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Salaries could increase by 4.5% for 2021 but 14% of companies say they would freeze pay increments according to a recent survey by human resource company, Mercer.
The survey also noted that this is is the first time in four years that overall salary increment has dipped below 5%.
In their annual Malaysia Total Remuneration Survey (TRS) 2020, they found that salaries in Malaysia increased by an average of 4.7% in 2020, despite the challenges triggered by the COVID-19 pandemic.
However, close to 2 in 10 companies have reported implementing a salary freeze.
The projection is based on the weak economic outlook for Malaysia, as its Gross Domestic Product (GDP) which is expected to contract between 3.5% to 5.5% in 2020 and also the continuous pressure on businesses to keep costs down amid uncertainty brought on by the COVID-19 pandemic.
It’s projected that inflation to be at 0.5% for 2021, compared to -1.2% in 2020.
Godelieve van Dooren, Mercer’s acting CEO for Malaysia said that the economy is expected to stage a rebound in the range of 5.5% to 8% in 2021, and businesses may be cautiously optimistic, taking a “wait-and-see” approach on their compensation strategy, depending on the course of the pandemic.
This is likely welcome news for employees as slowing inflation will also give real-wage increases a boost. On the other hand, due to this uncertainty, companies may decide to delay the increase of salaries, or lower the budget even further – depending on the industry segment of the company. After all, affordability remains a key criterion for deciding salary budgets.
Mercer’s acting CEO for Malaysia Godelieve van Dooren
Lifestyle Retail recorded the biggest dip
Across the industries surveyed, increments for the High Tech, Consumer Goods, Life Sciences and Chemical industries remained relatively stable.
The biggest dip in salary increases is reported in the Retail, Manufacturing and Logistics industry.
The salary increment in High Tech, according to Mercer’s Consulting Leader Koay Gim Soon is reflective of the growth in demand seen for technology, due in part to the massive shift to remote working and related digital transformation efforts of businesses; as well as general stable demand for consumer goods.
It’s not surprising that Lifestyle Retail recorded a drop, given the change in consumer consumption patterns, lower spending capacities and reduced leisure activities as a result of the pandemic.
Mercer’s Consulting Leader Koay Gim Soon
However, he said it is important to note that the impact even within industries may be uneven.
The salary trend forecast for 2021 in Malaysia remains stable across job families as well.
The top two job families with the highest projected salary increase are healthcare and pharmacy services (5.2%) and production and skilled trades (5.2%).
General management jobs are predicted to receive the lowest increment at 3%.
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It’s the same for bonuses
Overall, the survey sees budgeted bonuses for 2020 stayed the same as 2019 at 17%.
The High Tech industry saw the highest increase at 22% compared to 20% in 2019, while the Chemical industry saw an increase from 14% to 15%.
Lifestyle Retail industry saw the biggest drop from 12% in 2019 to 8% in 2020.
2019 proved to be a good year for businesses with 87% of companies reporting bonus payouts of 1.9 to 2 months this year. The remaining 13% did not provide any bonuses in 2020. However, we foresee a decrease in bonus payout in 2021, due to sustained uncertainty and the economic impact of COVID-19.
Mercer’s Consulting Leader Koay Gim Soon
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