The outlook for Malaysian employees in 2026 is decidedly optimistic, with employers across the manufacturing and non-manufacturing sectors projecting continued growth in compensation.
According to the latest salary survey by the Malaysian Employers Federation (MEF), nearly 90% of companies granted salary increases in 2025, signaling a strong commitment to maintaining competitive pay structures in a tightening talent market.
Here are the key findings from the survey, which covered 266 companies and over 40,000 positions.
1. 2026 Salary Forecasts
Employers expect the upward trend in wages to continue next year. MEF President Datuk Dr. Syed Hussain Syed Husman noted that performance remains the most influential factor in determining these adjustments.
- Executives: Forecasted increase of 5.33% (up from 5.03% in 2025).
- Non-Executives: Forecasted increase of 5.01% (up from 4.65% in 2025).
Factors driving these reviews include market competitiveness, profitability, and productivity.
2. Bonus Payout Trends
Bonuses remain a common practice, with over 80% of companies awarding them in 2025. Looking ahead to 2026, companies forecast bonus levels to remain stable:
- Executives: Forecasted at 2.16 per cent.
- Non-Executives: Forecasted slightly higher at 2.20 per cent.
3. Why Participation in the Progressive Wage Policy (PWP) is Low
Despite the government allocating over RM200 million to support higher wages, MEF Advisor Datuk Shamsuddin Bardan highlighted that employer participation in the PWP remains low.
The survey identified three key barriers for employers:
- Strict Entry Thresholds: Employers must first raise base salaries to RM1,008 before they can enroll. For companies currently paying just below this (e.g., RM1,007), this creates an immediate additional cost before any subsidy is received.
- Mandatory Training Logistics: Small organizations struggle to release employees for the mandatory training sessions required by the program.
- Sustainability Concerns: Employers are cautious because the wage subsidy is expected to last only two years. Once it ends, the higher wage cost falls fully on the employer, as salaries cannot be reduced later.
Source: Salaries on the up: 2026 outlook bright for Malaysian employees
