Higher salary increase expected in Malaysia in 2022

Companies in Malaysia forecast a median 4.5% salary increase in 2022, said Mercer recently when releasing results its annual Total Remuneration Survey (TRS) 2021.

The survey polled 544 organisations – of which 97% are MNCs – across 10 industries in Malaysia between April and June this year and excluded companies that have implemented wage freezes, according to Mercer.

While Malaysia’s median salary increase is below the Asia Pacific average of 5.4%, the raise is still a sign of confidence of the country’s economic recovery, Mercer pointed out.

The country’s GDP is estimated to grow by 4.5% this year, returning close to pre-pandemic levels of 4.4% in 2019, the firm added. 

Survey highlights

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%[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.

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.

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.