No pay rises at a quarter of MLEs - globally
Kuala Lumpur 18 March 2009 -Employees at nearly a quarter of Medium and Large Enterprises (MLEs) around the world could be worse off in the year ahead. Research from the Grant Thornton International Business Report reveals that 21% of businesses plan to offer no pay rise in 2009 while 3% of businesses actually expect to reduce pay.
The gloomiest salary predictions come from Asia Pacific where 29% of MLEs will offer no pay rise in 2009. In a market where labour is still plentiful and there has been a fall in demand for skilled workers, jobs are valuable and employees are easier to replace. In the most extreme case, Taiwan, 72% of respondents indicated that they would offer no pay rises and 5% are actually reducing pays in 2009. With only 10% of Taiwan businesses planning to increase salaries by the rate of inflation or above the prospects look particularly bleak.
The circumstances in Malaysia aren’t looking positive as well as 42% of MLEs reported that they will not be offering any raise to their employees. In fact, 6% are indeed reducing pays of employees. Malaysia ranks at no.5 for not offering any pay rise. Malaysia’s two immediate neighbours, Singapore and Thailand have also fared badly. In case of Singapore 49% of MLEs reported that they will not be offering any rise whilst in cases of Thailand it was 38%.
By contrast, economies in the Nordic region appear prepared to be the most generous in the year ahead with 82% of respondents indicating that they intend to increase salaries by inflation or above compared with the global average of 64%. Denmark topped the league with 91% while businesses in Finland (89%) and Sweden (74%) had similar high expectations.
Managing Partner of SJ Grant Thornton, Dato’ N.K. Jasani said, "There is a worrying inclination for employees as 34% of employers are intending to increase salaries only in line with inflation. With inflation rates falling around the world, salary increases in line with these rates may not offer much comfort to employees who are already struggling in the downturn."
Surprisingly, actual employment grew 0.5% globally on average in 2008 amongst the 7,200 businesses surveyed, although this is a drop in growth from 4% in 2007. Said Dato’ Jasani, "With unemployment figures rising around the world, we are unlikely to see employment growth in 2009, but on the contrary numerous reports of factory closures and down-sizing points to significant reversal in employment levels.”
Accordingly, when asked about expectations for employment in the year ahead, the majority of businesses expected to decrease rather than increase their staff numbers, with a global balance of -4% of businesses expecting to increase employment (compared to +33% in 2008). There is a significant negative balance of respondents expecting to increase employment in 2009 with the most pessimistic in Chile (-33%), Hong Kong (-35%) and Spain (-42%).
Employment is of paramount importance for a nation’s well-being. It provides the base for welfare of the people whilst at the same time contributing to growth. The other hidden or intangible benefits are for the reduction of crime and the engine for future sustainability.
Stimulus Budget & Employment
“Thus, our stimulus package recently announced must have its primary thrust on the creation and sustaining of existing jobs. The above is even more essential for a nation like Malaysia where there are high levels of imports and exports. If not properly planned and allocated, most of the stimulus quantum will flow out as imports,” emphasised Dato’ Jasani.
He further added that the creation of jobs should be for productive addition to our economic activity and not to inappropriately increase the size of our Government sector. As it stands now our number of Government employees as a percentage of our population is amongst the highest in the world.
Dato’ NK Jasani Managing Partner,
SJ Grant Thornton (pix)
“The recent stimulus package may in this context have not given sufficient focus to increasing employment in the hotel and tourism sector where we still have a vast middle-cost markets to tap in China and India,” mentioned Dato’ Jasani.
Growth Rate Mantra
“The East Asian nations have a fixation on growth rate when in fact a more meaningful indicator would be unemployment percentage. Employment contributes towards both the growth and long-term sustainability; apart from the social well-being,” concluded Dato’ Jasani.
End.
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Notes to editors:
About SJ Grant Thornton:
SJ Grant Thornton is a leading accounting and consulting firm in Malaysia. We are a member firm within Grant Thornton International Ltd and provide assurance, tax advisory and compliance, corporate finance, corporate restructuring and management consulting services.
The firm operates from its main office in Kuala Lumpur and its other offices in Penang, Johore Bahru and Kuantan.
About IBR:
The Grant Thornton International Business Report is an annual survey of the views of senior executives in privately held businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 7,200 MLEs in 36 economies providing territory, regional and global trend data on the economic and commercial issues affecting a sector often described as the 'engine' of the world's economy. Data for eight key industry sectors will be available for the first time in 2009.
This will be the fourth time the Malaysian firm is participating in the Global Report, now in its seventh consecutive year. For its previous involvement, the full results were launched in July last year by YB Tan Sri Muhyiddin Yassin, Minister of International Trade and Industry Malaysia.
The research is conducted by Experian Business Strategies Ltd. Grant Thornton International donates US$5 to UNICEF for every completed IBR questionnaire, a donation of over US$39,000 in 2008.
To find out more about the Grant Thornton International Business Report, please visit www.internationalbusinessreport.com
Grant Thornton is a member firm within Grant Thornton International Ltd (Grant Thornton International). Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by the member firms.
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