KUALA LUMPUR (Nov 27): Management consulting firm Korn Ferry has estimated that real-wage growth for Malaysian job holders will slip to 3.5% next year from 3.6% this year, after taking into account a 1.5% inflation rate to adjust the 5% salary increase forecast.

"There has been a lot of discussion that the inflation rate is not reflective of the rising cost of living in Malaysia and the government is working on developing a new index that can provide better accuracy on the cost of living," said Korn Ferry Asia Pacific Leader for Rewards and Benefits Practice Mary Chua.

"The new index can be used alongside the inflation rate to shore up efforts in addressing the rising cost of living and the diminishing real wage increase," she added.

In the Southeast Asian region, Indonesia is expected to have the highest real-wage growth rate of 5.1%, after adjusting for a 3% inflation rate, while Singapore will see the highest increase in real-wage growth by 0.6%, after factoring in a 0.4% inflation rate.

"There is a growing rhetoric to address living wages against increased pressure to deliver shareholder's returns in a challenging business climate.

"Wage growth needs to be in tandem with productivity increases, if not these costs will eventually be passed on to consumers and perpetuate the rising cost of living. We are having more conversations with companies on how they can manage their wage bill more sustainably, and to ensure more inclusion through longer term efforts like upskilling," added Chua.

Globally, real-wage growth for 2020 is predicted at 2.1%, after adjusting the headline forecast of 4.9% with an international inflation rate of about 2.8%.

In comparison, 2019 real-wage growth was only 1%, after taking into account global inflation of 4.1% to adjust salary growth rate of 5.1%.

Korn Ferry's findings were derived from Korn Ferry Digital's pay database, which holds information on over 20 million job holders in 25,000 organisations from over 130 countries.