Employee retention in Malaysia turns on four things: pay, job fulfilment, visible career progression and flexibility. In PwC’s 2022 Malaysia survey, pay (69%) and job fulfilment (66%) were the top factors workers weighed when considering a job change, and by 2023 the share likely to change employer within a year had risen from 17% to 28%. Since 1 January 2023, employees have also had a statutory right to request flexible working under the Employment Act 1955.
Forward-thinking organisations across Malaysia are already taking proactive steps by implementing their best employee retention strategies — and for good reason.
Insights from the PwC Asia-Pacific Workforce Hopes and Fears Survey 2023 reveal that less than two-thirds (59%) of Malaysian workers are happy with their jobs, and nearly one in five (17%) are very likely to switch to a new employer in the next 12 months.
PwC’s 2023 Malaysia findings show the pressure rising: 28% of workers were likely to change employer within 12 months, 47% planned to ask for a pay rise and 38% for a promotion. PwC has since published newer editions of the survey, most recently in December 2025.
This trend underscores a pressing need for genuinely innovative retention approaches that enhance job satisfaction and foster long-term loyalty and commitment.
As the workplace continues to evolve, especially in the wake of ongoing global changes, the emphasis on creating a supportive and engaging work environment has never been more critical.
Let’s take a look at what your Malaysian organisation needs to consider to retain its best employees.
1. Talent Retention in a Skills-Short Market
Understanding the Skills Shortage in Malaysia
The scarcity of skilled talent is a major concern for many Malaysian businesses. PwC’s survey reveals that 32% of Malaysian respondents believe the country lacks individuals with the right skills for their type of work.
This talent shortage has empowered employees, who are increasingly aware of their value in the marketplace.
The Rise of the Empowered Employee
This heightened self-awareness directly impacts retention strategies. Employees who recognise their valuable skills are more likely to seek out opportunities that acknowledge and reward their expertise.
The survey data support this, showing that 60 per cent of respondents are likely to request either a raise (32%) or a promotion (28%) in the next 12 months.
To attract and ensure employee retention of these skilled individuals, we believe organisations must proactively address their career aspirations and financial expectations, especially in sectors with high demand for specialised skills, where competition for talent is fierce.
Investing in Growth and Development in Malaysia
One effective approach is to prioritise upskilling and career development initiatives. By investing in employees’ growth through training programmes, mentorship opportunities, and workshops, we’ve seen that companies enhance their workforce’s capabilities and demonstrate a commitment to their professional advancement.
This approach can significantly improve job satisfaction and loyalty, making employees less likely to seek opportunities elsewhere.
Transparent Career Paths and Recognition for Employee Retention
We also recommend that organisations establish transparent career paths and promotion frameworks. When employees clearly understand how their skills and contributions align with advancement opportunities, they are more likely to remain engaged and motivated within the company.
Regular performance reviews, modern HR tracking systems, and constructive feedback and recognition can reinforce this sense of value and belonging, contributing to a positive work environment promoting long-term commitment.
In our experience, transparency in career progression not only motivates employees but also helps manage expectations and reduces the likelihood of them feeling undervalued or overlooked.
2. The Pursuit of Value in Employee Retention
As mentioned earlier in the article, while only 59% of Malaysian workers reported general job satisfaction, a worrying 17% indicated they are likely to switch employers within the next year.
We believe these statistics make it crucial to genuinely understand the factors that drive employees to seek new opportunities.
The Key Motivators: Pay and Job Fulfilment in Malaysia
The survey identifies two primary motivators behind job changes: pay (69%) and job fulfilment (66%). In an environment of rising inflation and economic uncertainty, financial rewards play a crucial role in employee decisions.
However, the data also highlights the growing significance of job fulfilment. Given how statistically close the desire for job fulfilment is to the desire for pay, offering things such as personal growth, meaningful work, and a sense of purpose is critical.
A Holistic Approach to Talent Retention
To counteract the impact of such high turnover, we believe Malaysian organisations should adopt a holistic approach to employee retention. Competitive compensation packages, including salaries, bonuses, and benefits, remain essential for attracting and retaining talent. However, companies must go beyond financial incentives to create a fulfilling work environment.
This means making a genuine effort to understand the unique needs and aspirations of their employees and tailoring retention strategies accordingly.
Creating a Fulfilling Workplace in Malaysia
This involves offering opportunities for skill development, recognising and rewarding employee contributions, and fostering a positive workplace culture. Our experience shows that mentorship programmes, leadership training, and employee recognition programs can significantly enhance job satisfaction and loyalty.
Additionally, consider promoting work-life balance through flexible work arrangements, wellness programs, and mental health support to contribute to a more fulfilling and engaging work experience.
By addressing the employees’ financial and non-financial needs, organisations can create a workplace where individuals feel valued, motivated, and less likely to seek opportunities elsewhere.
3. Remote and Hybrid Work Trends in Malaysia
We have all seen that the COVID-19 pandemic accelerated the adoption of remote work in Malaysia, and employees have grown accustomed to its flexibility and autonomy. The PwC survey confirms this, showing that 63% of Malaysian respondents prefer a mix of remote and in-person work.
The Rise of Hybrid Work
About 60% of workers anticipate their employers will adopt such hybrid work arrangements in the next 12 months. However, there is a disconnect between employee preferences and employer intentions regarding fully remote work.
While 18% of respondents express a desire to work remotely full-time, only 13% believe their employers will offer this option.
Bridging the Gap
To bridge this gap, we recommend that Malaysian organisations carefully consider the benefits of remote work and how it can be integrated into their overall work model. While some roles may require full-time in-person presence, many can be effectively performed remotely or through a hybrid model.
By offering flexible work arrangements, companies can tap into a wider talent pool, improve employee morale, and reduce overhead costs.
What the Law Requires: Flexible Working Requests
Flexible working is no longer only a policy choice. Since 1 January 2023, sections 60P and 60Q of the Employment Act 1955 have allowed employees to apply in writing for a flexible working arrangement that changes their working hours, working days or place of work. The employer must approve or refuse the application in writing within 60 days, and must give reasons for a refusal.
The Department of Labour Peninsular Malaysia’s Flexible Working Arrangement Guidelines, launched in December 2024, add practical detail, including employers’ duties when approving an arrangement. An employee can complain to the Labour Department if the employer misses the 60-day deadline, gives no reasons for a refusal, or discriminates in considering the request. The Employment Act 1955 applies in Peninsular Malaysia and Labuan; Sabah and Sarawak have their own labour ordinances.
Embracing Flexibility for Employee Retention
Perhaps most importantly, embracing flexibility doesn’t mean sacrificing productivity or collaboration. With the right tools and technologies, teams can collaborate seamlessly regardless of location.
Regular communication, clear expectations, and a results-oriented approach can ensure that employees remain engaged and productive in a hybrid or remote work environment.
By adapting to the evolving landscape of work preferences, organisations can position themselves as attractive employers and retain valuable talent in an increasingly competitive market.
4. Transparency as a Pillar of Employee Engagement in Malaysia
Environmental, Social, and Governance (ESG) considerations are increasingly important to employees in Malaysia. The PwC survey revealed that employees expect transparency from their employers regarding their organisation’s ESG efforts.
In particular, 65% of respondents raised the importance of transparency regarding an organisation’s impact on the economy, such as job creation, tax contributions, and wage levels.
64% also highlighted the significance of transparency regarding the organisation’s record of protecting worker health and safety.
The Demand for ESG Transparency in Malaysian Companies
This demand for transparency reflects a growing awareness among employees about the broader impact of their work and the companies they work for.
As an extension of this, employees want to align themselves with organisations that share their values and contribute positively to society and the environment.
This is backed up by research from Slack, which found that 80%t of workers “want to know more about how decisions are made in their organisation”.
By being transparent about their ESG initiatives, companies can demonstrate their commitment to responsible business practices and build trust with their employees.
Aligning Company Values with Employee Expectations
The PwC survey data also indicates that only 31% of respondents feel their companies help them minimise the environmental impact of their jobs. This suggests a significant opportunity for organisations to engage employees in sustainability efforts and empower them to contribute to positive change.
By involving employees in ESG initiatives, companies can foster a sense of purpose and shared responsibility, leading to increased engagement and loyalty. Remember, ESG is not just an obligation — it can also lead to innovative solutions and a more sustainable business model in the long run.
Where to Next With InCorp Malaysia
It’s clear that the dynamics of employee retention in Malaysia are undergoing a significant transformation. The data from PwC’s 2022 Workforce Hopes and Fears Survey underscores the need for organisations to adapt and evolve their strategies to meet the changing needs and expectations of the Malaysian workforce.
By understanding the factors that drive employee satisfaction, engagement, and loyalty, companies can create a workplace that attracts top talent, nurtures their growth, and fosters long-term commitment, crucial to business continuity.
Partnering with experts like Ascentium Malaysia can offer invaluable support in today’s dynamic environment. We bring a deep understanding of the Malaysian market.
Through our payroll and employer of record services, we help organisations hire and pay staff in Malaysia compliantly, so they can focus on the retention strategies that suit their teams.
Contact InCorp Malaysia today to learn more about how we can help you unlock the full potential of your workforce and achieve your business goals.
Related Guides
FAQs About Employee Retention in Malaysia
- The Great Resignation described the wave of higher employee turnover that followed the pandemic. In Malaysia, PwC’s surveys show the pressure continued: the share of workers likely to change employer within a year rose from 17% in 2022 to 28% in 2023, with pay and job fulfilment the main drivers.
- Malaysian employees increasingly value transparency in Environmental, Social, and Governance (ESG) matters. Companies that openly communicate their ESG efforts can attract and retain talent that aligns with their values.
- Investing in upskilling and career development programs is crucial. Providing clear career paths and recognising employee contributions can also help retain skilled talent.
- Flexible work arrangements, such as hybrid or remote work, can improve employee morale, attract a wider talent pool, and reduce overhead costs. Since 1 January 2023, employees can also make a formal written request for flexible working under the Employment Act 1955, and the employer must respond in writing within 60 days.
- Regular recognition of employee achievements can boost morale and encourage employees to remain with the company.
- InCorp Malaysia supports employers with payroll and employer of record services, helping them hire and pay staff compliantly in Malaysia while they focus on retaining their people.
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