KUALA LUMPUR: Companies in Malaysia are expected to allocate higher salary budgets in 2023, influenced mainly by the competitive labour market conditions and inflationary pressures driven by the rising cost of living, said global advisory, broking and solutions company, WTW.
Based on its Salary Budget Planning Report 2022, WTW said organisations in Malaysia are projected to increase their budgets for employee salaries by 5% this year.
Managing director and head of work rewards business for South Asia, Asean and Malaysia Tan Juan Jim said Malaysian companies have responded positively to global salary budget trends by increasing their salary budgets through various methods, such as optimising total rewards and adjusting prices.
“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,” he told Bernama.
Tan said that compounding economic conditions, such as the current high inflation rates and the uncertainty of how long it would last, would also force companies to re-evaluate their people strategies.
Many organisations have taken or plan to take, non-monetary actions to improve employee experience and these will include prioritising employee well-being by introducing new well-being benefits such as telehealth services, he said.
“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” he said.
Therefore, Tan noted that it might be more effective for companies to use differentiating factors like higher-order thinking (HOT) skills and pay-for-performance models to address the market challenges.
Commenting further on the survey, WTW Malaysia’s associate director of rewards and data intelligence Michael Ng Tze Kang said as the economy is likely grow moderately in 2023, companies are projected to take extra steps in their retention and attraction strategies based on the discussions of the median salary increase expectations.
He noted that employees in the country will only experience a real wage increase of 1%, based on the expectation of a 5% overall increase and an inflation rate of 4%, fuelling the sentiment that wages could be increased further.
Based on the latest compensation data, he said, two-thirds of organisations are experiencing the problem of attracting and retaining employees, especially in the digital, production and engineering fields.
“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.
Ng said many companies will improve their employee compensation packages by offering alternative or new well-being programmes to help keep them engaged and motivated.
“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.”
Ng noted that technology-related roles, namely information technology development, digital and cybersecurity, are the top jobs in demand across various industries.
“The top 10 jobs in demand include business analyst, data engineer, data scientist, data analyst, machine learning engineer, business intelligence engineer, database engineer, business intelligence analyst, product analyst, and customer intelligence analyst.
“As for the top 10 skills in demand, they are SQL, Python, technical reporting, machine learning, Apache Spark, documentation and records management, big data processing, extract, transform and load (data integration process), cloud computing and tableau,” he said.
Ng said this trend will likely continue into 2023 as Malaysia’s digital economy expands despite the labour market remaining tight.
Source: https://www.thesundaily.my/business/malaysian-companies-expected-to-increase-salary-budgets-this-year-HM10943774