KUALA LUMPUR: Salaries in Malaysia are projected to remain stagnant this year amid concerns of an economic slowdown, says a survey by a professional services firm.
Findings from Aon's 2023 Salary Increase and Turnover Study reveal that Malaysia and Singapore are projected to experience flat salary growth at 5.0 per cent and 4.0 per cent, respectively.
Neighbouring countries like Indonesia, the Philippines, Thailand and Vietnam expect to see median salary increases ranging from 4.9 per cent to 8.0 per cent.
Despite economic slowdown concerns, Malaysia is grappling with talent attrition, with attrition rates rising to 16.2 per cent last year from 14.9 per cent in 2022.
The Philippines reported the highest attrition rate at 17.5 per cent, while Vietnam had the lowest at 13.8 per cent.
Aon's Talent Solutions partner and Southeast Asia head Rahul Chawla said that salary-increase planning has become challenging across the region as companies navigate new forms of volatility.
"A reassessment of compensation strategies based on the latest data and analytics shows it's crucial for firms to stay competitive. By leveraging data from their own organisations as well as the market, companies can make better informed decisions enabling them to not only weather the challenges of an uncertain economic climate, but to thrive in an evolving workforce landscape."
Aon's report indicates that businesses in Southeast Asia remain cautiously optimistic about hiring.
While 40 per cent of companies report no changes to their recruitment numbers, an equal percentage impose hiring restrictions.
Headcount numbers across industries are still higher than pre-pandemic levels, with layoffs concentrated in non-core/expansion areas, while hiring continues in other business lines.
New hire premiums, reflecting compensation spending have become more cautious, averaging between 5.6 per cent and 13.3 per cent, as companies streamline budgets and enhance cost efficiency.
This marks a contrast to 2022, where Southeast Asia witnessed a hiring boom with new hire premiums ranging from 14.7 per cent to 23.6 per cent.
Aon Talent Solutions market leader in Malaysia, Rachel Jayaprakash, said businesses in the country seemed insulated from global economic trends.
"However, the country is now beginning to experience slower growth escalated by the rising cost of living and a depreciating ringgit.
She said this year was expected to be similar with moderate growth and consumption levels normalising.
"It is imperative for organisations to make informed decisions using insights and robust market data to create a holistic employee value proposition.
"This will not only ensure pay packages remain competitive to sustain the rising cost of living, but will also help build a resilient workforce in which employees are rewarded for their efforts and results."
She said looking ahead for this year, salary projections across industries in the country will vary, with the retail industry leading at 5.2 per cent, followed by technology, life sciences, and medical devices, as well as manufacturing at 5.0 per cent, and financial services at 4.5 per cent.
"Across Southeast Asia, more than half of the roles in Malaysia, the Philippines, and Singapore have salary increases outpacing inflation, as Indonesia, Vietnam, and Thailand lag behind."
The insights are based on data gathered in the third quarter of last year from 950 companies across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.