Salary hike drops to 5% in Malaysia

KUALA LUMPUR: The average salary increase rate in Malaysia declined to 5% in 2017, according to the 2017 Total Compensation Measurement TM (TCM) Survey study by Aon, a leading global professional services firm providing a broad range of risk, retirement, and health solutions.
The Healthcare, Financial, and Telecommunications sectors continue to offer up to 5.6% higher salary increases than market average. For the Financial sector, this is driven in part by significantly higher attrition rates of 16.3% compared with the Malaysia average of 14.4% — as reflected in Aon's dedicated Financial sector survey.
High attrition also affects other specialised sectors — such as Healthcare, where jobs in nursing report attrition rates in Klang Valley to be as high as 24%— and drives salary budgets in the upward direction.
Despite these trends, overall headcount growth within companies has remained relatively flat across all industries, with none exceeding 3%. Following economically challenging years in 2015 and 2016, companies have adopted a more cautious approach to hiring in 2017 — choosing instead to focus on productivity measures with existing employees, rather than headcount growth.
Prashant Chadha, Managing Director, Aon Hewitt Malaysia & Philippines, said: "As the Malaysian economy rebounds after two difficult years, Malaysian businesses are under pressure to match their talent's expectations, especially when it comes to salary.
"While employers are willing to pay a premium for good and critical talent, they are also focusing on KPI-related performance metrics that enable them to be more cautious about keeping within reasonable salary costs that can withstand challenging times."
Starting salaries for fresh graduates have risen to 7% higher than 2016, spurred on by sectors such as healthcare where median starting salaries for fresh graduates were recorded at RM2,770 per month versus RM2,500 per month last year.
However, high-growth industries such as Technology did not record any significant change in fresh graduate median salary over the past year. Nevertheless, the Technology industry, offering an entry level salary of RM3,600 per month to fresh graduates, maintains a 38% salary premium over the general market in 2017.
Other findings from the Aon Malaysia 2017 Total Compensation MeasurementTM (TCM) Survey include:
1. Regulatory changes continue to impose a challenge on the Hospitality industry. Due to the Minimum Wages Order 2016, many hoteliers have had to rethink their compensation structures as up to 25% of the workforce stand to be impacted by this new change in governance.

2. Salary increase projections for 2018 have minimally increased to 5.1%.
3. The Aon 2017 Total Compensation MeasurementTM (TCM) Survey-Malaysia is a nationwide measure on how organisations are addressing projected salary budgets, variable pay, cost-saving initiatives, and more. It contains data on key changes in employee compensation in 2017 and projections for 2018. Data was collected from 189 employers across Malaysia.