Salary budgets for employees projected to increase in 2023, says broking company
07 May 2023 10:15am
Based on its Salary Budget Planning Report 2022, WTW says organisations in Malaysia were projected to increase their budgets for employee salaries by five per cent this year.
Based on its Salary Budget Planning Report 2022, WTW said organisations in Malaysia were projected to increase their budgets for employee salaries by five per cent this year.
Managing director and head of work rewards business for South Asia, Asean and Malaysia Tan Juan Jim said Malaysian companies had responded positively to global salary budget trends by increasing their salary budgets through various methods, such as optimising total rewards and adjusting prices.
"Companies are taking multiple actions, which include enhancing employee experience and modifying their compensation programme, to address the labour shortages issue in Malaysia.
"Some companies are also making more frequent salary increase adjustments (and) in fact, 40 per cent of organisations are even considering bi-annual salary increases to attract and retain talent,” he told Bernama.
Tan said that compounding economic conditions, such as the current high inflation rates and the uncertainty of how long it would last, would also force companies to re-evaluate their people strategies.
Many organisations had taken or planned to take non-monetary actions to improve employee experience and these would include prioritising employee well-being by introducing new well-being benefits such as telehealth services, he said.
"With significant risks in the local economy, continued high inflation and employers grappling with talent supply challenges, organisations must be more creative to address attraction and retention challenges.
"For instance, information technology skills are one of the most sought after by companies now with 71 per cent of the organisations reported experiencing problems to retain and attract digital talents,” he said.
Therefore, Tan noted that it might be more effective for companies to use differentiating factors like higher-order thinking (HOT) skills and pay-for-performance models to address the market challenges.
Commenting further on the survey, WTW Malaysia’s associate director of rewards and data intelligence Michael Ng Tze Kang said as the economy would likely grow moderately in 2023, companies were projected to take extra steps in their retention and attraction strategies based on the discussions of the median salary increase expectations.
He noted that employees in the country would only experience a real wage increase of one per cent, based on the expectation of a five per cent overall increase and an inflation rate of four per cent, fueling the sentiment that wages could be increased further.
Based on the latest compensation data, he said two-thirds of organisations were experiencing the problem of attracting and retaining employees, especially in the digital, production, and engineering fields.
"Since three years ago, employees find that it is getting harder to retain employees in anticipation of 2023, and learning from the pandemic and various uncertainties surrounding the market, employers had learned new ways of attracting and retaining employees,” he said.
Ng said many companies would improve their employee compensation packages by offering alternative or new well-being programmes to help keep them engaged and motivated.
"Other than salary increases, more than 60 per cent of companies are taking non-financial measures offering more workplace flexibility to address the competitive labour market and inflation pressures.
"(Initiatives like) flexible work arrangements will allow employees to reduce the overall cost of commuting to the workplace,” he said.
Ng noted that technology-related roles, namely information technology development, digital and cybersecurity, were the top jobs in demand across various industries.
"The top 10 jobs in demand include business analyst, data engineer, data scientist, data analyst, machine learning engineer, business intelligence engineer, database engineer, business intelligence analyst, product analyst, and customer intelligence analyst.
"As for the top 10 skills in demand, they are SQL, Python, technical reporting, machine learning, Apache Spark, documentation and records management, big data processing, extract, transform and load (data integration process), cloud computing and tableau,” he said.
Ng said this trend would likely continue into 2023 as Malaysia’s digital economy expands despite the labour market remaining tight.
As such, organisations would be shifting their focus on other aspects of compensation, including bonuses, health benefits, and career development opportunities, to future-proof a healthy working environment, he added. -Bernama
