Malaysian survey highlights differing staff/employer expectations

While many Malaysian workers are looking for pay rises, the organisations they work for are focusing on compensation planning to retain talent in a competitive job market – that is, aligning employee incentives with their business objectives.

That might mean creating incentives for employees to work longer hours, achieve aspirational goals or simply keep working for the organization in the face of alternative employment options.

That was one of the conclusions of a salary survey by leading jobs platform foundit, which also found that more than half of the surveyed employees recognise the need for salary adjustments to align with industry standards. However, nearly half of respondents anticipate just single-digit salary growth in their upcoming pay reviews.

The survey found that more than half (52%) of employees believe they are underpaid compared with industry peers; 38% feel their salary is above average, while 10% do not know how their pay compares to market rates.

Executive-level professionals (those with more than 15 years of experience) have the highest salary awareness, with only 4.48% unaware of market benchmarks, compared with mid-career professionals who display greater uncertainty.

V Suresh, CEO of foundit, commented: “This research offers fascinating insights into Malaysia’s compensation landscape, revealing both challenges and opportunities. The perception gap we’ve identified – where many employees believe their pay falls below industry standards – represents a critical area for employers to address.

“Malaysian businesses have a compelling opportunity to strengthen their position in the talent market through enhanced salary transparency and more effective communication about compensation. By helping professionals understand how their pay compares to true market rates and developing transparent frameworks for advancement, organisations can better align expectations with reality.”

Suresh added: “This strategic approach benefits not just individual employees but strengthens organisational resilience and competitiveness. For Malaysia to continue its trajectory as a business hub in Southeast Asia, addressing these compensation perception gaps will be instrumental in attracting and retaining the best talent.”

Small pay rises expected

When it comes to pay rise expectations, the foundit survey discovered that 45% of professionals expect only a 0-10% salary hike in their next review. Some 28.7% anticipate a 6%-10% increment, while 16.7% expect a rise of just 0%-5%.

It also found that professionals with four to six years’ experience are the most optimistic, with nearly 39% expecting a 6%-10% rise, while senior executives anticipate more conservative increases (0%-5%).

Over the past three years, 36% of professionals saw no salary growth, indicating wage stagnation. Some 30% experienced salary reductions (19% minor, 11% significant), while 34% received salary hikes (18% modest, 16% substantial), highlighting industry-specific trends.

The survey also found that the key drivers of salary levels are:

• Skills in demand: 31.2% of professionals believe in-demand skills significantly impact salaries.
• Economic trends: 30.5% see macroeconomic factors shaping pay scales.
• Sector-specific challenges: 18% cite industry constraints as key influencers.
• Technological advancements: 12% recognise tech-driven disruptions affecting wages.

The foundit report said: “For organisations navigating the complexities of talent acquisition and retention in today’s competitive landscape, this research provides a valuable measuring stick for assessing current approaches and identifying areas for strategic improvement. By leveraging these insights to enhance both compensation structures and communication around pay, companies can create more appealing work environments that attract and retain top talent.”

EPF contributions ‘will boost economy in the long-term’

Foreign workers’ mandatory Employees Provident Fund (EPF) contributions will benefit Malaysia’s economy over the long term as employers will favour hiring more local talent as costs increase, Malaysia Employers Federation (MEF) President Syed Hussain Syed Husman has said.

While operational costs would be higher, the advantage is that it would foster sustainable business practices among local industries, said Husman. He added that industries such as manufacturing, construction and plantations, which are largely dependent on foreign workers, may explore alternatives like automation and a greater focus on local talent.

“The additional cost will affect competitiveness… some businesses will pass the cost on to consumers. Otherwise, they will face tighter profit margins on already thin margins,” he said.

This being the case, he reiterated that the government’s imposition of the EPF contribution presents an opportunity for employers to hire more local talent, as the cost of employing foreign workers rises.

The private sector has lauded the 2% EPF contribution by employers and foreign workers as of March this year as it will, among other things, improve worker retention and build loyalty.

The Employees’ Provident Fund is a federal statutory body under the purview of the Ministry of Finance. It manages the compulsory savings plan and retirement planning for private sector workers in Malaysia.