EMPLOYERS of small and medium enterprises (SMEs) are so far willing to raise wages to retain employees, industry groups said, as the labour shortage due to the Covid-19 epidemic leaves them hard-pressed to run operations.

SME Association of Malaysia president Ding Hong Sing said the ability to pay higher wages still depends on a company’s finances but generally, employers are starting to do so, especially for their more experienced workers who are already familiar with operations.

“The salary increase range is between 5% and 17%, depending on the company’s ability,” he told The Malaysian Insight.

Hiring new workers has been difficult, following the labour shortage caused by the government’s freeze on new foreign labour during the epidemic.

It has begun to lift the restriction gradually, allowing recruitment for certain sectors first, such as plantations and commodities.

Ding said hiring locals is difficult as they are reluctant to work overtime.

“Whereas with foreign workers, they are willing to work overtime every day to earn more,” he said.

The Associated Chinese Chambers of Commerce and Industry of Malaysia’s Koong Lin Loong, who heads its SMEs committee, said he has seen companies offering salary increments of between 5% and 10%.

He said some have managed to continue operations during the epidemic and are in a decent financial position.

“If you look at other sectors that suffered, such as hospitality and tourism, then you shouldn’t expect a salary increase there,” he said.

More than 60% of companies surveyed in a 2021 study by the Malaysian Employers Federation (MEF) have raised salaries “for all or some” workers – at the executive level – compared with the previous year.

MEF president Dr Syed Hussain Syed Husman said 65.2% of them did so, compared with 58.41% in 2020.

For non-executive staff, 66.4% of the firms in the survey also raised their wages, compared with 61.7% in 2020. 

The average salary increase last year for both executives and non-executives was around 4.4%, he said.

More than 200 companies participated in the survey, accounting for 23,448 executives and 66,420 non-executive workers.

Syed Hussain said Malaysia is not experiencing a “resignation wave”, as reported in the United States.

Employee turnover in Malaysia is still low, with people holding on to jobs if they can, due to economic uncertainty caused by the epidemic. Unemployment last November was 4.3%, said Syed Hussain.

“Employees thinking of leaving their companies (now) would have to consider risks of whether the new job would be any more secure than their present one. The Omicron variant and epidemic uncertainties also make people reluctant to go for a job change,” he said.

There are still resignations despite the slow economy, as some employees may be reluctant to return to the office in companies that have stopped work-from-home arrangements and demand workers be present on site, Syed Hussain said.

Some employees are now opting for more flexible jobs or to join the gig economy.

While MEF’s survey shows that more employers have increased wages, it is still too early to predict the same for this year.

Businesses may have resumed but new disruptions such as the recent floods may squeeze them further.

“Employers are still focusing on ensuring their business is sustainable and will continue to deal with cashflow uncertainties. Micro-enterprises and SMEs still need support from the banks to get out of trouble,” Syed Hussain said. – January 24, 2022.