Salaries for highly-skilled talent in Malaysia are projected to soar to a total annual premium of RM10.08 billion (USD2.52 billion) by 2030, driven by a potential shortage of 94,000 highly-skilled employees, according to a new study by Korn Ferry (NYSE:KFY). Wage premiums are amounts employers could be forced to pay employees, over and above normal inflation increases.
Korn Ferry’s Salary Surge study estimates that annual wage premiums for highly-skilled talent in the Finance, Insurance, Real Estate and Business Services sector in Malaysia will total RM1.896 billion (USD474 million) by 2030; while the Technology, Media and Telecommunications (TMT) sector’s total is expected to reach RM744 million (USD186 million). The country’s Manufacturing sector meanwhile could see annual wage premiums totalling RM540 million (USD135 million).
Malaysia is not alone in this region. By 2030, large economies like China will see an additional wage premium bill of more than USD342 billion, and USD468 billion for Japan. However, smaller markets like Singapore, are likely to feel the most pressure – the nation state is forecast to face a wage premium equivalent to about 10% of its 2017 GDP.
Mary Chua, Senior Client Partner of Korn Ferry Malaysia said, “This new normal of scarcity in abundance – plenty of people, but not enough with the skills organisations will need to compete, will be further amplified by an accelerating brain drain of talent moving to higher income economies with considerable talent scarcity and wage premiums. These higher income markets also tend to have an aging population, and there are examples of nations already proactively reviewing their immigration policies to augment talent supply in their country”.
Chua also commented that “Given the advancement of technology, the most sought-after talent may not even need to relocate to take on lucrative assignments in today’s borderless digital economy. Make no mistake, the acquisition and retention of highly skilled talent in the next decade will stand shoulder to shoulder, if not take increasing precedence over management of financial and physical assets.”
“Not being able to find the right talent will threaten business models and growth. But finding and buying the best and brightest with considerable wage premiums, could also jeopardise the profitability of companies. Organisations need a more sustainable approach to managing this talent crunch or this can quite easily cripple long term performance and growth.” adds Chua.
Despite this however, there are opportunities for companies in Malaysia to manage this talent crunch.
Companies in Malaysia must focus on engaging, re-skilling and driving retention. The study reveals that by 2030, Malaysia will have a surplus of 17.3% Level B (mid-skilled) and 28.2% Level C (low-skilled) labour that can be effectively re-skilled and re-deployed to meet organisational needs. In tomorrow’s world of work, the employees who will succeed will not necessarily be the people with the highest level of academic achievement. Instead, they will be the ones who are adaptable and willing to learn, with enough flexibility to handle rapidly shifting working environments and less hierarchical structures. Companies need to identify the talent of tomorrow and help them achieve their potential.