Bonuses and aligning salaries with inflation crucial for talent retention

New Straits Times

28-04-2025

KUALA LUMPUR: Malaysia's job market is advancing steadily, but competitive remuneration remains a key factor in attracting and retaining top talent.
According to Jobstreet by SEEK's latest Hiring, Compensation & Benefits Report, more than 75 per cent of companies awarded performance bonuses in 2024, with average payouts rising to two months' salary—an improvement from the previous average of 1.7 months.
Additionally, 77 per cent of businesses implemented salary increments, keeping pace with Malaysia's 2.49 per cent inflation rate.
To further strengthen their employee value propositions, many organisations have expanded their benefits packages, introducing initiatives such as replacement leave, extended parental leave, and flexible working arrangements.
Notably, 45 per cent of employers now offer family-friendly benefits, including nursing rooms and enhanced medical coverage.
The report also noted that retrenchments, right-sizing, and strategic pivots in 2024 have shaped a cautiously optimistic hiring outlook as companies prepare for 2025.
To stay competitive and resilient, Jobstreet by SEEK recommends employers expand their recruitment strategies to include part-time, contract, or freelance workers; align salary adjustments with inflation trends and industry benchmarks, and enhance employee benefits, particularly in offering flexible work arrangements, mental health leave, and family-focused policies.
It noted that nearly half of Malaysian companies plan to expand their permanent workforce in the first half of 2025, entering the new year with renewed optimism. This projected growth is driven by business expansion (83 per cent), the creation of new roles (58 per cent), and the need to replace departing employees (43 per cent).
"Businesses are approaching 2025 with cautious optimism, focusing heavily on flexibility, competitive compensation and strategic use of AI," said Nicholas Lam, managing director at Jobstreet by SEEK Malaysia.
"As AI becomes integral to recruitment processes, businesses must adopt it thoughtfully to ensure inclusivity and effectiveness," he said in a statement.
Drawing from insights gathered from 2,279 human resource professionals and employers, the report highlights that while business confidence is strong—with 83 per cent of companies planning for expansion—2024 was largely a year of recalibration.
Despite 74 per cent of respondents describing the job market as active, 39 per cent of employers reduced their workforce in 2024, a notable increase from 18 per cent in 2023 and 14 per cent in 2022.
The top three permanent full-time roles remained consistent with 2023: administration and HR (41 per cent of companies that hired), accounting (33 per cent), and sales or business development (21 per cent).
Meanwhile, Malaysian employers are increasingly embracing AI in their recruitment strategies. Seventy per cent of businesses now assess candidates' AI skills during hiring, with 36 per cent viewing it as a critical competency.
Additionally, 26 per cent of recruiters are using AI tools to assist with job advertisement creation (71 per cent), candidate screening (59 per cent), and assessments (54 per cent).
However, nearly half of employers (47 per cent) remain cautious, citing concerns about the potential loss of personalisation in the hiring process.
The report also highlights meaningful progress in diversity, equity, and inclusion (DEI) initiatives. As of January 2025, women now hold 33 per cent of board seats among Malaysia's top 100 public listed companies (PLCs) and 27.6 per cent across all PLCs.
"Employers in Malaysia are increasingly recognising DEI not just as a moral responsibility but also as a strategic business advantage," Lam said.