Big drop in real salary increase for Malaysians next year


According to Quane, the vast majority of the highest real salary increase in the world are predicted to be seen in Asia (Source:

THE increase in real salary is expected to drop significantly for Malaysian workers in 2020 to 2.9% from 4% recorded this year taking inflation rate into account.

ECA International Asia regional director Lee Quane said despite the forecasted nominal salary increase staying at 5%, inflation in Malaysia is expected to rise from 1% to 2.1%.

“The inflation will reduce the rate at which salaries increase in real terms for workers in the country.

“Although it is still relatively high, the predicted lower real salary rise for workers compared to 2019 has seen Malaysia drop out of the global and Asia-Pacific’s top 10,” he said.

The average increase in real terms in the region is forecasted to be 3.2%, which is far above the 1.4% global figure.

According to ECA International, Asian nations lead the way for salary increases, dominating the top 20 by 13 and occupying the top five spots in the global rankings.

Quane said the vast majority of the highest real salary increase in the world are predicted to be seen in Asia.

“The average real salary increase in the Asia-Pacific region is forecasted to be 3.2%, which is significantly higher than the global average of 1.4% and nearly three times the European average of 1.1%.

“This is a trend that we have seen for many years now due to low inflation and rising productivity in many Asian economies, resulting in the rapid growth of salaries compared to other regions,” he added.

The average real salary increase in Singapore is forecasted to be 3% above inflation in 2020, which is a slight drop from 2019’s 3.3%.

Quane said although the forecasted real salary increase is set to be slightly lower in the coming year, a larger increase is projected against regional neighbours Hong Kong, Taiwan and Japan.

“The notably low level of inflation that Singapore has seen over recent years, coupled with a tight labour supply and talent restrictions due to immigration constraints, implies that salary increases will remain relatively high,” he said.

Vietnam and Thailand both saw significant increases in real salary having placed top five in the global rankings with increases of 5.1% and 4.1% respectively.

Quane added that the workers in both countries will see further increases as the nominal salaries expected to be given by employers stay ahead of the inflation’s low levels that the two countries will see next year.

“This has been a long-term trend for both countries, as productivity continues to grow and inflation is controlled,” he added.

While Hong Kong will see higher salary increase, but still among the lowest in Asia.

According to Quane, despite normal salary increase staying at 4% next year, the predicted drop in inflation to 2.6% from 3% implies that employees will see slightly better overall salary increase in real terms in 2019.