Businesses Enter 2025 with Cautious Optimism, Emphasising Flexibility, Competitive Compensation, and Strategic AI Use

28 April 2025

KUALA LUMPUR: Employers in Malaysia enter 2025 with a sense of confidence, as indicated by Jobstreet by SEEK’s latest Hiring, Compensation and Benefits Report 2025. Almost half of the surveyed companies (48%) plan to expand their permanent workforce in the first half of the year, driven by business growth (83%), the creation of new roles (58%), and the replacement of outgoing staff (43%).

Based on insights gathered from 2,279 HR professionals and employers, the Hiring, Compensation & Benefits Report 2025 serves as a comprehensive resource for employers, HR leaders, and policymakers, assisting them in navigating and adapting to the evolving employment landscape.

“Businesses are approaching 2025 with cautious optimism, placing a strong emphasis on flexibility, competitive compensation, and the strategic use of AI,” remarked Nicholas Lam, Managing Director at Jobstreet by SEEK Malaysia. “As AI becomes integral to recruitment processes, it is essential for businesses to adopt it thoughtfully to ensure both inclusivity and effectiveness.”

While confidence levels for 2025 are high, with 83% of companies planning for expansion, it is important to recognise that 2024 was a year of recalibration for many employers.

Despite 74% of respondents viewing the job market as active, 39% of companies reduced their workforce, with permanent full-time roles being the most impacted. These retrenchments, right-sizing initiatives, and shifting strategies illustrate a cautiously optimistic hiring landscape as we move into the new year.

In the competitive job market, remuneration packages continue to play a crucial role in attracting, retaining, and motivating top talent. Employers are enhancing their compensation and incentives, with over 75% of companies awarding performance bonuses in 2024, averaging two months’ salary—up from 1.7 months in the previous year. In addition, 77% of businesses implemented salary increments to align with Malaysia’s inflation rate of 2.49%.

To attract and retain talent, many companies are upgrading their employee benefits packages to include perks such as replacement leave and additional parental leave. Furthermore, 45% of employers now offer flexible working hours and family-friendly policies and facilities, including nursing rooms and medical coverage.

As AI becomes increasingly integral to modern recruitment, Malaysian employers are rapidly adapting their practices—from assessing candidates’ AI skills to deploying innovative tools that optimise the hiring process. Currently, 70% of Malaysian businesses evaluate candidates' knowledge of AI during recruitment, with 36% considering it a critical skill. Additionally, 26% of recruiters utilise AI tools for tasks such as job ad creation (71%), candidate screening (59%), and assessments (54%). However, 47% of businesses express hesitation towards embracing AI due to concerns about a perceived lack of personalisation.

Diversity, Equity, and Inclusion (DEI) are gaining momentum across Asia, and Malaysia is making substantial progress. In 2024, the CEO Action Network introduced a DEI Implementation Guide at Bursa Malaysia, reinforcing national efforts to foster more inclusive workplaces.

The 30% Club continues to drive transformation, with Corporate Malaysia achieving 33% women representation on the boards of the top 100 public-listed companies (PLCs) and 27.6% across all PLCs as of January 2025—an encouraging sign of advancement.

Beyond the boardroom, a growing number of companies are embedding DEI principles into their workplace culture. While 40% have formal DEI practices in place, adoption is steadily increasing through initiatives such as anti-discrimination policies (59%), unconscious bias training (53%), clear diversity goals (46%), and blind resume screenings (40%). The momentum is building, and the direction is clear.

“Employers in Malaysia are increasingly recognising DEI not just as a moral obligation but also as a strategic business advantage,” Lam noted. “However, substantial progress is still needed to firmly integrate these principles within organisational cultures.”

To remain competitive in the year ahead, Jobstreet by SEEK encourages companies to broaden their recruitment strategies to include part-time, contractual, or freelance workers. It is also suggested that salary adjustments align with inflation and industry benchmarks, using insights from SEEK’s Talent Attraction Lab study.

Companies are recommended to prioritise AI literacy, leveraging SEEK’s Decoding Global Talent 2024 report and initiatives under Malaysia’s National Artificial Intelligence Roadmap 2021-2025 along with HRD Corp initiatives.

Additionally, strengthening DEI practices is advised, taking advantage of tax incentives from Malaysia’s Budget 2025 to support diversity, caregiving responsibilities, and women re-entering the workforce.

As businesses navigate an ever-evolving landscape shaped by digital transformation and changing workforce expectations, this report serves as a timely guide for strategic decision-making.

With actionable insights on hiring trends, compensation, AI adoption, and DEI, it equips employers with the tools necessary to build resilient, future-ready organisations in 2025 and beyond.