Companies to cut recruitment spending

A salary reduction of more than 30% raises concern about matters related to finances and job security


NINE out of 10 Malaysian employees are feeling some negative effects in the workplace with 48% reportedly impacted by remunerations and salary cuts, while 24% were required to take leave due to the Covid-19 pandemic.

A survey by JobStreet found that one in three employees reported a salary reduction of more than 30%, raising concern about matters related to finances and job security.

“These concerns led to a decline in job happiness, particularly those in service-oriented sectors and those with young children. Employees of small to medium organisations also rated lower job happiness,” JobStreet said.

However, the government’s short-term National Economic Recovery Plan will help cushion the blow due to this pandemic.

“This includes the My30 unlimited travel pass, the provision of free 1GB Internet data, business grants for small and medium enterprises with gig economy workers and other financial grants,” it said.

Meanwhile, 66% of employees experienced an increased work scope, especially for higher-paid employees in big corporations.

Three out of four companies in Malaysia are most likely looking to cut spending on recruitment, according to Mercer’s Pulse Survey, as most firms are prioritising staff engagement and support initiatives to cope with the impact of the Covid-19 pandemic.

Based on 201 companies surveyed, 13% are working out programmes to enable more flexible and adaptive work arrangements, while 11% plan to increase budget for healthcare benefits.

The survey said 86% of companies have not reduced salaries, while 11% have revised variable budget bonuses.

The survey also revealed that only 4% of companies are considering retrenchment.

Mercer regional industries and career products leader for Asia Pacific Godelieve Van Dooren said more than protecting the lives and livelihoods of employees, companies are looking at other factors.

“Companies are prioritising employee engagement and wellness at a time when manpower costs are being watched closely. This reflects a growing recognition that employees are their most valuable assets, even more so at a time like this,” she said.

Van Dooren said the survey looked at the profound impact of the pandemic and found only 5% of companies implemented a salary cut, while 17% made a reduction in budgets for salary increments.

“Sectors that indicated the largest reduction in salary increment budgets include non-financial services (from 5.1% to 3.3%), manufacturing (from 5.1% to 3.8%), as well as retail and wholesale (from 5% to 4%). This is followed by consumer goods (from 5% to 4.6%) and life sciences (from 5.3% to 5%),” she said.

Other survey findings found that 62% of companies had given out salary increments with 19% delaying and 16% freezing.

“For sales incentives, 11% modified their sales plans, while 27% said adjustments will be made based on sales targets and plans, followed by a commission ratio and threshold,” the survey said.

Mercer (M) Sdn Bhd consulting leader Koay Gim Soon said moving forward, most companies that are severely impacted will implement a pay reduction or headcount reduction to survive the financial crisis.

“Less affected companies will most likely maintain the current salary cost with a hiring freeze, but companies should view this crisis as an opportunity to evolve and strengthen its culture,” he said.

Koay said despite fighting to stay afloat, companies should not lose their values.

“Companies that prioritise employees’ wellbeing, whether through wellness programmes, healthcare support and flexibility at work caregivers, will stand out and do better in the longer run.

When the pandemic ends, job seekers will also value these employers when the pressure to recruit and retain talent returns,” he concluded.