KUALA LUMPUR (Dec 5): Malaysian employers are expected to raise salaries and offer higher bonuses for their workers in 2026, according to the latest Salary Survey for Executives and Non-Executives by the Malaysian Employers Federation (MEF).

The federation, which represents over 5,000 employer members across various sectors, said survey findings indicate that employers are projecting average bonus payments of 2.16 months for executives and 2.02 months for non-executives in 2026.

Salary adjustments are also expected to edge higher next year, with companies forecasting average increments of 5.33% for executives and 5.01% for non-executives.

“Performance remains the primary determinant of salary increases, followed by company financial capacity and annual review cycles,” MEF president Datuk Dr Syed Hussain Syed Husman said in a statement on Friday.

For 2025, the MEF reported that 82% of companies awarded bonuses. Executive-level employees received average payouts of 2.17 months, while non-executives received 1.96 months.

Meanwhile, nearly 90% of companies granted salary increases in 2025, with adjustments averaging 5.03% for executives and 4.65% for non-executives.

Syed Hussain added that the MEF’s review of 236 collective agreements across 36 industries shows company performance (80.1%) remains the most important factor influencing across-the-board adjustments, followed by individual performance (64.5%).

For 2024, the average across-the-board adjustment stood at 5.06%, implying a continued, steady post-pandemic wage recovery, he further mentioned.

Aside from compensation, Syed Hussain added that businesses are also accelerating digital transformation initiatives, with rising interest in artificial intelligence (AI) tools expected in 2026.

The survey shows that 74.1% of employers are "somewhat familiar with AI", although adoption remains moderate with roughly only more than one third of employers having implemented AI tools. The remaining 19.1% still plan to adopt within 12 months, 17.6% are unsure, and 26% are yet to begin adoption.

According to the federation, the key barriers to AI-adoption for employers include high implementation costs (67.8%), limited internal expertise (66.7%), and cyber security or ethical concerns (53%).

It noted that only 16.5% of employers believe Malaysia currently has sufficient AI talent, while one-third say the "talent pool is inadequate" and over half remain unsure.

Beyond that, Syed Hussain also revealed that 68% of employers expect medical costs to rise over the next year, citing findings from the MEF Medical Benefits Survey 2025, which covered 231 companies.

He said that in order to mitigate the rising healthcare expenses, employers are expanding preventive health initiatives such as health awareness programmes (70.7%), wellness and disease-prevention initiatives (58.5%) and biometric screening (39.5%).

Overall, mental health remains a top concern, with 74% of employers identifying "workplace stress and pressure to meet performance targets as main issues affecting employees".