Inside Malaysia: Salaries expected to rise in 2025

Salaries in Malaysia are projected to increase by 5% in 2025, fuelled by economic expansion in high-tech manufacturing, construction, and digital transformation.

For one, the growing reliance on automation, artificial intelligence, and other emerging technologies has heightened demand for specialised skills, particularly in cybersecurity, cloud computing, and engineering.

This upward salary trend was identified in the Total Remuneration Survey by Mercer, which highlighted how businesses are reshaping remuneration strategies to attract and retain top talent in a fiercely competitive labour market.

According to Mercer, 70% of companies have revised their compensation structures to remain appealing to skilled professionals. The shift towards an employee-centric job market has prompted organisations to offer higher wages, flexible work arrangements, and tailored benefits to address talent shortages and evolving workforce expectations.

Talent retention strategies in a changing market

Mercer’s survey, which covered more than 680 companies across industries such as technology, consumer goods, manufacturing, retail, chemicals, life sciences, energy, and shared services, revealed that 24% of organisations plan to expand their workforce in the coming year.

Malaysia’s projected 5% salary increase is higher than Singapore’s 3.8% but falls short of Indonesia’s 6.1%.

While hiring intentions have softened slightly compared to the previous year, companies remain committed to strategic talent acquisition.

The energy and shared services sectors continue to lead in base salary offerings, while specialised roles in cybersecurity architecture, project controls engineering, and enterprise architecture command premium pay due to talent scarcity.

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Digital transformation in Malaysia’s job market

The digital revolution is turning Malaysia’s job market on its head, with businesses scrambling to secure professionals proficient in artificial intelligence, data science, and cloud computing.

Randstad’s 2025 Job Market Outlook & Salary Guide also reports that 59% of employers in Malaysia plan to expand their workforce next year, with technology, sales, and business development emerging as key hiring areas.

The integration of digital capabilities across sectors – including legal, human resources, marketing, and finance – is further driving the demand for tech-savvy talent. Malaysia’s digital economy is expected to contribute over 25% of GDP by 2025, while e-commerce alone is set to hit a gross merchandise value of US$25 billion by 2030.

Foreign direct investments and advancements in blockchain and the Internet of Things are accelerating this digital shift. Meanwhile, Malaysia’s manufacturing sector, which accounted for 23% of GDP in 2022, is heavily investing in automation and robotics in line with the country’s Fourth Industrial Revolution policy to enhance productivity.

Also Read: Malaysia's new Minimum Wage Order

Renewable energy transition faces hurdles

Malaysia’s energy sector presents a more complex picture as the country moves towards renewable energy adoption. The government aims to increase its renewable energy share to 20% by 2025 and 31% by 2035. However, obstacles such as the high capital costs of infrastructure integration and land acquisition remain significant.

To encourage investment in sustainable energy, Malaysia has introduced initiatives such as the Feed-in Tariff scheme and the Renewable Energy Technology Park, aimed at fostering innovation and incentivising green energy projects.

Malaysia’s employee-centric workplace

The perception of Malaysia as a low-cost labour market is changing just as companies prioritise skilled talent and offer competitive salaries to attract and retain high-calibre professionals.

According to Randstad, 33% of employers plan to raise wages by 3% to 5%, while 28% are prepared to offer increases between 5% and 10%.

Moreover, nearly one-third of employees can expect a bonus equivalent to one to two months’ salary.

Apart from monetary compensation, businesses are taking an employee-first approach to workforce management. Flexible work arrangements, diverse incentive structures, and personalised benefits are becoming central to talent retention strategies.

Employers are also recognising that salary alone is not enough – cultivating a workplace culture focused on collaboration, career development, and employee wellbeing is equally crucial in securing long-term loyalty and high performance.

Malaysia’s job market is continuing to evolve. Because of this, companies that balance competitive pay with meaningful employee engagement will be best positioned to thrive in the years ahead.