4.5 percent increase in salary forecasted for 2021, says Mercer survey

Findings of the Mercer Malaysia Total Remuneration Survey 2020 revealed that a 4.5 percent increase in salary is forecasted for 2021.

The survey also found that salaries in Malaysia has increased by an average of 4.7 percent in 2020, despite challenges triggered by the Covid-19 pandemic. However, close to 2 in 10 companies have reported implementing a salary freeze. This marks the first time in four years that overall salary increment has dipped below 5 percent. 

Godelieve van Dooren, Mercer’s acting Chief Executive Officer for Malaysia said, “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.”

Across the industries surveyed, increments in the High Tech, Consumer Goods, Life Sciences, and Chemical industries remained relatively stable. The biggest dip in salary increase is reported in the Retail, Manufacturing, and Logistics industry.  

“The salary increment in High Tech 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.

However, it is important to note that the impact even within industries may be uneven. In consumer goods, for example, consumer durables, as well as beverages like alcohol, have come under immense pressure, which may impact salary increments in harder hit sectors,” Koay Gim Soon, Consulting Leader, Malaysia explained.

Overall, budgeted bonuses for 2020 stayed the sam in the previous year at 17 percent but there will be a decrease in bonus payout in 2021 due to sustained uncertainty and the economic impact of the pandemic.

Based on Mercer’s pulse survey, 84 percent of companies in Malaysia indicated that they have imposed a hiring freeze in 2020 with 81.4 percent stating that the hiring freeze will remain until business stabilises. 

Besides increment, it is said that retaining employees or getting them back to office would be a challenge to employers. 

“The most concerning factor for employees to get back to the office will be the safety of the environment and the requirements to enter the office, for example following standard operating procedure (SOP), which may not be in favour of all. 

Additionally, companies have seen some success with remote working, with close to 50 percent stating that it has not impacted the level of productivity,” said Dooren.

She also emphasised how companies should be prepared as the pandemic is unprecedented and the duration of it is uncertain. 

It is best to create contingency plans for scenarios at 3/6/12 months and plan re-boarding support for employees, she added. 

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