A new exciting news for Malaysians hoping for a salary jump next year. Korn Ferry, a management consulting firm headquartered in Los Angeles, California estimates that salaries in Malaysia are expected to increase by 5% in 2020. While salaries are expected to increase, at the same time, real-wage growth is expected to drop marginally from 3.6% in 2019 to 3.5% in 2020.
“While Malaysian employers are budgeting for the same level of salary increase for 2020 at 5% as they had for 2019, real-wage growth will decrease in 2020 when inflation rate is considered. There has been a lot of discussion that the inflation rate is not reflective of 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,” said Mary Chua, Asia Pacific Leader for Rewards and Benefits Practice, Korn Ferry.
She also added the new index can be used alongside the inflation rate to shore up efforts in adressing the rising cost of living and the diminishing real wage increase.
Indonesia is forecast to have the highest real-wage growth
According to the forecast issued by Korn Ferry, Indonesia is forecast to have the highest real-wage growth at 5.1% – after accounting for an inflation rate of 3%. Salaries in Singapore are forecast to grow by only 4%, but, the island-nation’s relatively low inflation rate of 4% translates into a 0.6% increase in real-wage growth as compared to last year. Making it the highest in the region.
Globally, salaries are predicted to grow at a rate of 4.9% in 2020. With a global inflation rate prediction of approximately 2.8%, real-wage salary increase is predicted at 2.1%. In 2019, real-wage salary increases across the globe were only 1% with salary growth rate at 5.1% and global inflation at 4.1%.
Nine of the top 10 countries on the salary growth ranking were from Asia
Thanks to low inflation and rising productivity in many Asian economies, the report said that nine out of the top 10 countries on the salary growth ranking were from Asia. The biggest increase went to India, 5.4% above inflation, followed by Vietnam, Indonesia, Cambodia and Thailand. The country with the lowest predicted salary increase was Argentina with -22% which suffered due to its 51 per cent inflation rate.