Driven by a talent shortage in critical roles as Malaysia moves towards the 4th industrial revolution, overall salary increase in Malaysia across industries has been projected to be 5.5%, according to Mercer’s Compensation Planning Report 2018.
Reflecting the Malaysian government's focus on digitalisation and disruptive industries, unsurprisingly, the top three industries with the highest salary increases next year include the high tech (5.5%), life sciences (5.5%), and shared services outsourcing (5.6%) industries.
The report predicted that hiring intentions are likely to be relatively similar to previous years with most companies holding steady with no change in hiring intention.
Other findings from the report include:
- Consumer goods industry has the highest attrition rate in Malaysia
- Manufacturing sector leads recovery, drives higher functional wage premiums
- Sales and engineering talent most difficult to hire and retain
"It is also critical that the companies do more to engage the talent they currently have especially given the acute shortage of talent in certain critical roles. This would mean an increased focus by companies towards creating differentiation through career pathways or innovative health and benefits."
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Over in Singapore, overall salary increase has been projected to be 3.9% with most industries (except life insurance, insurance, internet, real estate, and banking) expected to have a higher salary increase in 2018.
At a 4.1% projected increase, the life sciences industry is predicted to have the highest salary increase in Singapore.
However, Mercer cautions that a rise in inflation could depress wage increases though, with most employers not planning to increase HR budgets in 2018.
Kulapalee Tobing, Mercer's Singapore career products leader said: "With the new industry skills frameworks being introduced by Skills Future, companies are looking to both reskill existing talent pools as well as also hire for different skillsets even when hiring for replacement roles. The current focus on restructuring the economy and raising productivity by the government has meant a sharp focus on continuous learning. At the same time, the Singapore workforce is one of the most disengaged at work according to Mercer-Sirota research. This would mean an increased focus by companies on creating differentiation through innovative health and other benefits."
Across Asia Pacific, the highest salary increases in 2018 are forecasted for Bangladesh (10%), India (9.8%) and Vietnam (9.1%) while financial hubs Hong Kong and Singapore are both expected to see 3.9% increases.
On the flip side, Japan is forecasted to have the lowest increase at 2% followed by New Zealand (3%) and Australia (3%).
Notably, real wage growth (salary increase minus inflation rate) has been steadily rising in the region, often reaching double digits in emerging markets. While specific industries have varying forecasts, the strongest push is expected to come from the chemical and life sciences industries.
When it comes to hiring intention, India, Vietnam and the Philippines are expected to hire at a greater pace compared to countries in the region, whereas hiring intentions are expected to be lower in Singapore, Malaysia and Hong Kong.
The overall hiring outlook is positive, however, with five out of 10 companies looking to maintain headcount, including replacements for turnover.
Mercer's report pointed out that talent scarcity plays a major role here, with extremely high premiums to be gained by those people with the right skills, in addition to local language expertise. Almost half of (48%) companies in Asia report having difficulty filling-in vacant positions, as compared with 38% of the companies globally struggling to find the right talent to fuel their business expansion.
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