The implementation of the Goods and Services Tax (GST), depreciation of the Ringgit, declining commodity prices - all of which led to a decline in Malaysia's GDP to 4.7% in 2015.

Beating GDP projections of 4.5% in 2016, Aon Hewitt's new salary survey forecasts stable salary increases for employees in Malaysia at 5.8% in 2016 - up from 5.6% in 2015.

The year 2015 also saw performance-related bonuses increasing slightly to about two to three months of annual base salary, and are projected to remain stable in 2016.

Projected salary increases were highest in the telecommunications sector at 6.6%, followed by transportation as well as construction, pegged at 6.2%.

Hi-tech and hospitality sectors are gearing up for the lowest sectoral increments at 5.2%.

Within South East Asia, the Philippines and Vietnam experienced the highest growth in 2015 at 6% and 6.5% respectively and are projected to continue to enjoy the highest growth in 2016.

Salary Increases


Despite the stable pay rises, Malaysia recorded South East Asia's second highest involuntary turnover at 6%, and the third highest voluntary turnover at 9.5%.

The report found three factors that could be attributed to voluntary attrition: better external opportunities, further studies, and work life balance.

Similarly, the three most popular measures to retain employees were: pay above market, improved work life balance, and timely and meaningful feedback from managers.

Nur Amani Yusnida, Aon Hewitt's performance, reward and talent practice lead in Malaysia noted that employers are taking a "wait and see" approach to budgeting salaries - reflected in the average increase of 5.7% over the past 5 years.

She added: "Voluntary turnover is trending down this year at 9.5% from 12.2% in 2014 reflecting the volatility and instability of the market conditions in Malaysia."

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The report also found links between how economic trends such as the depreciation of the ringgit, the implementation of the GST, and the road toll hike are impacting employees.

To cope with higher living costs, 22% of organisations have plans of providing higher salary increases than initially budgeted for, while 7% are providing a one-off salary adjustment.

Close to half of organisations (47%) have revised their benefits programme in the last two years, particularly the medical limits and mileage claim.

The recent bout of haze also made its mark, with 76% of organisations reporting an increase in medical claims and 72% pointing to an increase in medical leave.

In light of these external factors, Surendran Ramanathan, Aon Hewitt Southeast Asia's retirement and investment practice lead advised companies to ensure their rewards dollars are spent more prudently to get the biggest bang for the buck.

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