Salaries in Malaysia to remain stagnant in 2024, says report

As we enter 2024, salaries in Malaysia are expected to remain stagnant in 2024. Meanwhile, neighbouring countries such as Indonesia, the Philippines, Thailand and Vietnam can expect to see an increase in median salary. 

These were the results of a 2023 salary increase and turnover study done by global professional services firm, Aon. It also found that salaries in Malaysia and Singapore are projected to experience a flat salary growth of 5.0% and 4.0% respectively.

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Despite economic slowdown concerns, Malaysian employers are struggling with talent attrition. The report revealed that attrition rates across Malaysia rose to 16.2% in 2023, up from 14.9% in 2022. This is a result of an ever-changing talent strategy and the ongoing gap between supply and demand of talent, according to Aon.

Attrition rates are the highest in Philippines at 17.5% and the lowest in Vietnam at 13.8%. 

Rahul Chawla, partner and head of talent solutions for AON, said that salary-increase planning has become challenging across the region as companies navigate new forms of volatility. 

Aon's study also revealed that businesses in Southeast Asia are optimistic about hiring. 40% of the companies surveyed reported no changes to their recruitment numbers, while another 40% imposed hiring restrictions.

Despite an increase in layoffs earlier in the year, Aon's findings showed that headcount numbers across industries are still higher than pre-pandemic levels. Layoffs were mainly concentrated in non-core areas while hiring continues in other business lines.

Additionally, new hire premiums are averaging between 5.6% and 13.3%, with firms becoming more cautious with compensation spends as they streamline budgets, enhance cost efficiency and re-evaluate compensation strategy.

This is a stark contrast to 2022, where southeast Asia saw a hiring boom with new hire premiums averaging between 14.7% and 23.6%.

Rachel Jayaprakash, market leader of talent solutions for Aon in Malaysia said that the country is now beginning to experience slower growth escalated by the rising cost of living and a depreciating ringgit and that 2024 is expected to be similar with moderate growth and consumption levels to normalise.

Looking ahead to 2024, Aon reported that salaries across industries in Malaysia will continue to vary with retail leading at 5.2% followed by technology, life sciences and medical devices, and manufacturing at 5.0% and financial services at 4.5%.

That said, Malaysia CEOs are slightly more optimistic about the economic outlook this year as compared to last year. Yet, confidence is fragile as megatrends including technological disruption and the climate transition converge.

While economic outlook pessimism has reduced among Malaysia CEOs, concerns about macroeconomic volatility (30%) and inflation (27%) persist in the next 12 months.

Workforce woes continue in 2024 as 70% of Malaysia CEOs cite the lack of skills in their company’s workforce and two-thirds (64%) point to the lack of technological capabilities.

This suggests that the workforce remains at the centre of reinvention, in an increasingly digitalised economy and sectors where digital transformation is pivotal.

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