Aon Hewitt, the global talent, retirement and health solutions business of Aon, has released the latest trends and insights from its
Total Compensation Measurement (TCM)
2015 Study.
Global TCM is Aon Hewitt's
comprehensive compensation benchmarking study that covers 25,000
positions across 180 countries.
Salary increase by industry sector in Malaysia
While gross domestic product (GDP) is forecast to increase from
3.1% in 2015 to 3.6% in 2016 globally, the economic climate closer to
home is a crucial element when making decisions related to employee
rewards. Within
Southeast Asia (SEA),
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.
Indonesia witnessed the highest consumer price index (CPI) at 6.8% in SEA year on year whereas
Malaysia, the
Philippines,
Singapore,
Thailand and
Vietnam show a moderate CPI.
Philippines has the highest unemployment rate at 6.3% in 2015
1.
The implementation of the goods and services tax (GST),
drastic depreciation in the ringgit, and declining commodity prices were some of the factors affecting
Malaysia's economy this year.
Malaysia
experienced a decline in GDP to 4.7% in 2015 and a projection of 4.5%
in 2016, a slightly reduced CPI at 2.4% in 2015 and a projection of 3.8%
in 2016, and a slightly increased unemployment rate at 3.0% in 2015 and
2016
1.
In this context, the Aon Hewitt salary survey shows stability with salary increases for 2015 at 5.6% and a projected
increment of 5.8% in 2016
2. Prashant Chadha, Managing Director of Aon Hewitt in
Malaysia said: "With a rocky 2015 and shrinking budgets, organisations must make rewards decisions not just with reliable data but also driven by the bigger picture and economic climate. Best Employers pair their rewards decisions with other aspects like performance, careers, culture, diversity, etc. to further strengthen their total rewards approach in line with employee value proposition."
Aon Hewitt
Total Compensation Measurement indicates that overall
salary increments in 2015 and projected salary increment in 2016
remain relatively
consistent across all employee categories whereas variable payouts
(performance bonus) increased slightly in 2015 to about two to three months of
annual base salary and are projected to remain stable in 2016. The
Aon
Hewitt 2015-2016 Malaysia Salary Increase Survey shows higher salary
increase projections across most industries in 2016
3.
Malaysia recorded the second highest
involuntary turnover rate at 6% and third highest voluntary turnover
rate at 9.5% in SEA this year. The Aon Hewitt
TCM 2015 Survey in
Malaysia
shows the correlation between voluntary attrition reasons and retention
measures, the top three being: "better external opportunity", "further studies" and "work life balance" while key measures taken to attract and
retain employees are "pay above market", "improved work life balance"
and "timely and meaningful feedback from managers"
3.
Nur Amani Yusnida, Aon Hewitt Performance, Reward and Talent Practice Lead in
Malaysia
said: "With salaries and increases remaining stable since 2011 (average
increase of 5.7% over the past five years) employers are taking the 'wait
and see' cautious approach to budgeting salaries. The consistent theme
seems to be 'doing more with less', optimising costs wherever possible.
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."
In addition, Aon Hewitt's recently launched
Hot Topic Survey provides
insights on how organisations are reacting to the recent economic
environment impacting both employers and employees in
Malaysia.
The study reveals that the highest impact of the current economic
environment on organisations comes from the depreciation of the ringgit
followed by the implementation of GST. The recent road toll hike
also has a significantly negative impact on employees. However,
employees view the minimum wage increment and increased salary cap for
Social Security Organisation (SOCSO) eligibility that was proposed in the 2016 Budget as positive.
To
cope with higher living costs, 22% of organisations indicated their plans
of providing higher salary increases than initially budgeted for and 7%
of organisations are providing a one-off salary adjustment. Nearly half (47%) of
organisations have revised their benefits programmes in the last two years,
particularly the medical limits and mileage claims. About eight in 10 (76%) of organisations
reported an increase in medical claims and almost three quarters (72%) indicated an increase in
medical leave following the recent haze issue
4.
Surendran Ramanathan,
Aon Hewitt Southeast Asia Retirement and Investment Practice Lead said:
"The current economic environment has adversely impacted both employer
and employees, companies are facing budget constraints whilst employees
are expecting to cope with the increase cost of living. Therefore
companies should ensure their rewards dollars are spent more prudently
to get the biggest bang for the buck."
Prashant emphasised: "Based on our
Best Employers Research and through numerous CEO and HR directors' interviews we note that, while organisations
optimise costs, employees must continue to strive, and high performers
will not only benefit from pay for performance but also from other
career-linked total rewards to ensure retention and alignment to
business goals."
The
Aon Hewitt Best Employers - Malaysia
2015 Country Report shows that 78% of Best Employers combine
structured, formal recognition programmes with manager-driven recognition
as opposed to market average of only 40%. The study also revealed that
Best Employers compensate their high performers 21% higher than their
average performers. This differentiation results in higher employee
perception in terms of recognition and performance impact on pay
5.
The Best Employers have also shown their strength across all four
pillars of Best Employers, specifically in high employee engagement,
compelling employer brand, effective leadership and a high performance culture. The Best Employers enjoy 38% higher income than market
average, attain 50% better growth in profits than market average
and have filled 38% more job openings internally compared to
market average.
Gap between rhetoric and reality in Malaysia organisations
1 International Monetary Fund (IMF)
2 Aon Hewitt 2015-2016 Global Salary Increase Survey
3 Aon Hewitt Total Compensation Measurement
4 Aon Hewitt Hot Topic Survey, November 2015.
SOCSO provides social security
protection to employees and their dependents through social security
schemes to improve the employees' social wellbeing.
5 Aon Hewitt Best Employers -- Malaysia 2015 Country Report