Are SMEs Hiring? Employment Trends for 2023
It’s been a rough year so far for the global economy. The World Bank estimates that global growth will slow to 1.7% as a result of headwinds, including higher inflation, reduced investment, and geopolitical disruptions.
The fragile state of the economy means that any adverse event – such as higher-than-expected interest rates or the resurgence of COVID-19 – could push the global economy into a recession. In emerging market and developing economies, the World Bank states that per-capita income growth is anticipated to average 2.8% during the next two years, which is a full percentage point less than the average for the period 2010–2019.
Positive Growth Prospects
Nevertheless, the open economies of Southeast Asia are uniquely positioned to avoid the worst of the economic headwinds. Household consumption and investment remain strong, while inflationary pressures are easing. China’s reopening also paves the way for a rapid rebound in activity.
In line with this, Malaysia’s job market is expected to remain strong, with SMEs in particular bullish on hiring and post-pandemic recovery. According to BrioHR’s SME Index for the fourth quarter of 2022, Malaysian SMEs are hiring despite the current global economic slowdown, and they are expected to be more resilient in 2023 as a result.
On this, Benjamin Croc, co-founder and CEO of BrioHR, said, “According to our live data, Malaysian SMEs are more committed to succeeding in 2023 than ever before. The data shows that they are defying expectations and continuing to grow their workforce by 3% over the previous quarter. This is happening across many sectors, but especially in the food and beverage sector. They were the hardest hit by the pandemic, so the fact that they are now hiring more indicates that the market is recovering. Salaries have yet to recover and have remained flat, with a 0.1% increase quarter on quarter.”
This was echoed by the Chairman of the Economic Club of Kuala Lumpur (ECKL), Datuk’ Seri Mohamed Iqbal Rawther who said:
“In 2023, Malaysia’s job market is expected to benefit from firm domestic demand, China’s reopening, the revival of construction projects, the expansion of primary sectors as global commodity prices rise, and modest external trade activities.”
Datuk’ Seri Iqbal also stated that the Statistics Department reported that the unemployment rate in November 2022 remained stable at 3.6% for the third month in a row. The labour force and employment grew by +2.5% year on year and +3.2% year on year, respectively, supported by robust domestic economic growth and a positive external environment.
Rising Cost of Living, but Rising Wages as Well
BrioHR’s Croc also revealed, “Businesses are taking a variety of steps to support their employees as inflation continues to rise and the threat of an economic downturn looms. According to Mercer’s annual Total Remuneration Survey 2022, Malaysia’s median salary increment is also above the Asia-Pacific average of 4.4%. Based on findings from Aon, a financial services firm, the 2023 median salary increase across industries will be 6.8% for Indonesia, 5.1% for Malaysia, 6% for the Philippines, 4.7% for Singapore, 5.1% for Thailand, and 7.9% for Vietnam. This finding is mirrored in our index. Indeed, the findings show that Malaysia’s SME sector has been increasing wages for its employees since the first quarter of 2022.”
He shared that according to Trading Economics global macro models and analysts’ expectations, average Malaysian wages are projected to trend around RM3670 per month in 2023 and RM3920 per month in 2024.
“Aside from dealing with rising living costs, an impending recession, high (albeit decreasing) inflation, and labour difficulties, there are also amendments to Malaysia’s Employment Act 1955, which took effect on 1 January 2023. Reduced working hours, flexible work arrangements, extended maternity and paternity leave regulations, and other changes are among them,” shared Croc.
Looking Forward
BrioHR and the ECKL concluded that the SME sector is looking forward to the 2023 Budget, which is set to be released on 24 February.
Both went on to say that the government has stated that, because of its high potential, it will focus on improving the capacity of the SME sector. The SME sector is the backbone of the country, and it is eager to see what measures will be included in the budget to help the SME industry grow. After three perilous pandemic years, the SME industry is more determined than ever to weather the storm with a stronger workforce. The findings of the SME index reflect the resilience, strong management structures, forward planning, and future proofing that many SMEs have put in place to help them succeed in the market.
It’s been a rough year so far for the global economy. The World Bank estimates that global growth will slow to 1.7% as a result of headwinds, including higher inflation, reduced investment, and geopolitical disruptions.
The fragile state of the economy means that any adverse event – such as higher-than-expected interest rates or the resurgence of COVID-19 – could push the global economy into a recession. In emerging market and developing economies, the World Bank states that per-capita income growth is anticipated to average 2.8% during the next two years, which is a full percentage point less than the average for the period 2010–2019.
Positive Growth Prospects
Nevertheless, the open economies of Southeast Asia are uniquely positioned to avoid the worst of the economic headwinds. Household consumption and investment remain strong, while inflationary pressures are easing. China’s reopening also paves the way for a rapid rebound in activity.
In line with this, Malaysia’s job market is expected to remain strong, with SMEs in particular bullish on hiring and post-pandemic recovery. According to BrioHR’s SME Index for the fourth quarter of 2022, Malaysian SMEs are hiring despite the current global economic slowdown, and they are expected to be more resilient in 2023 as a result.
On this, Benjamin Croc, co-founder and CEO of BrioHR, said, “According to our live data, Malaysian SMEs are more committed to succeeding in 2023 than ever before. The data shows that they are defying expectations and continuing to grow their workforce by 3% over the previous quarter. This is happening across many sectors, but especially in the food and beverage sector. They were the hardest hit by the pandemic, so the fact that they are now hiring more indicates that the market is recovering. Salaries have yet to recover and have remained flat, with a 0.1% increase quarter on quarter.”
This was echoed by the Chairman of the Economic Club of Kuala Lumpur (ECKL), Datuk’ Seri Mohamed Iqbal Rawther who said:
“In 2023, Malaysia’s job market is expected to benefit from firm domestic demand, China’s reopening, the revival of construction projects, the expansion of primary sectors as global commodity prices rise, and modest external trade activities.”
Datuk’ Seri Iqbal also stated that the Statistics Department reported that the unemployment rate in November 2022 remained stable at 3.6% for the third month in a row. The labour force and employment grew by +2.5% year on year and +3.2% year on year, respectively, supported by robust domestic economic growth and a positive external environment.
Rising Cost of Living, but Rising Wages as Well
BrioHR’s Croc also revealed, “Businesses are taking a variety of steps to support their employees as inflation continues to rise and the threat of an economic downturn looms. According to Mercer’s annual Total Remuneration Survey 2022, Malaysia’s median salary increment is also above the Asia-Pacific average of 4.4%. Based on findings from Aon, a financial services firm, the 2023 median salary increase across industries will be 6.8% for Indonesia, 5.1% for Malaysia, 6% for the Philippines, 4.7% for Singapore, 5.1% for Thailand, and 7.9% for Vietnam. This finding is mirrored in our index. Indeed, the findings show that Malaysia’s SME sector has been increasing wages for its employees since the first quarter of 2022.”
He shared that according to Trading Economics global macro models and analysts’ expectations, average Malaysian wages are projected to trend around RM3670 per month in 2023 and RM3920 per month in 2024.
“Aside from dealing with rising living costs, an impending recession, high (albeit decreasing) inflation, and labour difficulties, there are also amendments to Malaysia’s Employment Act 1955, which took effect on 1 January 2023. Reduced working hours, flexible work arrangements, extended maternity and paternity leave regulations, and other changes are among them,” shared Croc.
Looking Forward
BrioHR and the ECKL concluded that the SME sector is looking forward to the 2023 Budget, which is set to be released on 24 February.
Both went on to say that the government has stated that, because of its high potential, it will focus on improving the capacity of the SME sector. The SME sector is the backbone of the country, and it is eager to see what measures will be included in the budget to help the SME industry grow. After three perilous pandemic years, the SME industry is more determined than ever to weather the storm with a stronger workforce. The findings of the SME index reflect the resilience, strong management structures, forward planning, and future proofing that many SMEs have put in place to help them succeed in the market.
