KUALA LUMPUR, Nov 27 — Salaries in Malaysia are expected to increase by 5.0 per cent in 2020, while real-wage growth is expected to drop marginally to 3.5 per cent from 3.6 per cent last year after adjusting for an inflation rate of 1.5 per cent, said global management consulting firm Korn Ferry.
While Malaysian employers are budgeting for the same level of salary increase of five per cent for 2020 as they had for 2019, real-wage growth will decrease in 2020 when inflation rate is considered, said Korn Ferry’s Asia Pacific leader for rewards and benefits practice, Mary Chua.
“There has been a lot of discussion that the inflation rate does not reflect the rising cost of living in Malaysia and the government is working on developing a new index that can provide better accuracy on the cost of living.
“The new index can be used alongside the inflation rate to shore up efforts in addressing the rising cost of living and the diminishing real wage increase,” she said.
Across Southeast Asia, Korn Ferry said Indonesia is expected to have the highest real-wage growth at 5.1 per cent, after accounting for an inflation rate of 3.0 per cent.
“Meanwhile, although salaries in Singapore are anticipated to grow by only 4.0 per cent, the island-nation’s relatively low inflation rate of 0.4 per cent translates into a 0.6 per cent increase in real-wage growth as compared to last year, the highest in the region,” it said.
Chua said there is a growing rhetoric to address living wages against increased pressure to deliver shareholder’s returns in a challenging business climate.
“Wage growth needs to be in tandem with productivity increases, if not, these costs will eventually be passed on to consumers and perpetuate the rising cost of living.
“We are having more conversations with companies on how they can manage their wage bill more sustainably, and to ensure more inclusion through longer term efforts like upskilling,” she added.
Around the world, Korn Ferry predicted salaries to grow at a rate of 4.9 per cent next year.
“With a global inflation rate prediction of approximately 2.8 per cent, real-wage salary increase is predicted at 2.1 per cent.
“In 2019, real-wage salary increases across the globe were only 1.0 per cent, with salary growth rate at 5.1 per cent and global inflation at 4.1 per cent,” it said. — Bernama