Business Leaders Split On Economic Outlook As Rising Cost Bites

Online recruitment platform, Employment Hero on its business sentiment survey indicated SME leaders across Malaysia are split down the middle when it comes to views on whether the country’s economy will perform well in the next 12 months.

The survey showed exactly half of business leaders polled predict that it will be good (50%), a substantive 18% believe that it will be poor, while 32% remain cautious that it will be average.

Amidst this backdrop, almost half (48%) state that inflation and rising costs will be their biggest challenge this year and almost a third view digital transformation, AI, and automation as the biggest upcoming opportunity. In light of these challenges and opportunities, an impressive 79% are confident about the growth prospects for their own companies in 2024.

However, micro and small businesses were significantly more likely to rate their company performance in the past year as average or poor as compared to medium-sized businesses. Only 59% of leaders from micro and small businesses said their company performance was good in the past year, compared to 74% of leaders from medium-sized businesses.

The key reasons for average or poor company performance in the past year were rising costs and inflation, as well as lower revenues and customers. Undoubtedly, micro and small businesses who already have such lean teams and narrow profit margins are likely to be hit the hardest by such external pressures.

Medium-sized businesses are struggling with the upskilling of staff, and manpower shortages. This is likely due to higher salary expectations, a mismatch between industry needs and skills training, and a reported higher than average rate of brain drain.

“We are seeing green shoots in a lot of areas. A healthy majority of SMEs in Malaysia are starting to feel more confident having gone through some challenging years. Some are still concerned, tightly managing their expectations and business. But who would blame them? It’s been quite difficult to get a clear line of sight on the economy.  said Kevin Fitzgerald, Managing Director (Asia) at Employment Hero.

On the report findings, Mei Ling, Human Resource & Administration Manager at Muji, comments: “One of the biggest challenges for Muji is the heightened competition for top talent. As the job market evolves and remote work becomes more prevalent, attracting and retaining skilled employees becomes increasingly competitive.

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