Japan’s key tech workers are now cheaper than Malaysia’s

Nikkei News Mar. 18, 2026

Japanese Tech Executive Pay Reduced. (full article below)

For the first time, senior technology salaries in Malaysia have overtaken Japan’s across every major role – from IT Director to CTO. The gap is structural, not temporary. Malaysia is transitioning from a manufacturing hub to an innovative R&D work culture – and competing for the same global talent and investment that Japan wants.
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TOKYO — Salaries for key technology roles in Malaysia have overtaken those in Japan for the first time, driven by rising investment in the Southeast Asian country’s booming semiconductor industry and intensifying competition in digital sectors, a report released Wednesday showed. Among executive roles, the upper range of annual pay for chief technology officers in Malaysia reached 28 million yen ($176,000), up 27% from a year earlier, according to regional data compiled by Hays Specialist Recruitment Japan. This surpassed Japan’s 26 million yen, which remained flat from a year ago.

Grant Torrens, managing director of Hays Specialist Recruitment Japan, said Malaysia had seen “aggressive” salary growth in recent years, supported by strong foreign direct investment and government efforts to grow its Penang semiconductor hub in the country’s north. “Malaysia’s salary increase is structural rather than cyclical,” Torrens told Nikkei Asia. He pointed to initiatives such as the National Semiconductor Strategy, a 10-year roadmap to move the country beyond assembly and testing work to higher-value areas such as chip design, advanced packaging and wafer fabrication.

“Of course, it will reach an equilibrium where it starts to cool off, like what we’re seeing in China now, but I don’t think this is a one-year phenomenon,” he added. “Malaysia is transitioning from a manufacturing hub to an innovation-driven R&D hub, so salaries are likely to keep rising for some time.”

The report covers more than 1,200 job roles based on Hays data as of the end of December and a survey of over 13,000 professionals across five markets where the company has a presence: China, Hong Kong, Japan, Malaysia and Singapore. Exchange rates are based on February levels.

According to the report, Malaysia has broadly seen strong wage growth over the past year. About 30% of workers reported salary increases of more than 6%, the highest share among the five markets, compared with 20% in China, 19% in Hong Kong, 18% in Singapore and 14% in Japan. Malaysia, with its semiconductor focus and an emerging data center hub, has prioritized these industries as growth drivers, attracting investments notably from Chinese and Western companies seeking to diversify supply chains. This influx has intensified competition for talent, pushing up wages. At the same time, the government is moving to raise the minimum salary threshold for expatriate visas, aiming to secure more opportunities for local workers.

Among other roles, the top salary range for IT directors in Malaysia reached 28 million yen, exceeding Japan’s 25 million yen. A year earlier, Malaysia had the lowest upper range among the five markets at 22 million yen. For electronics industry roles, research and development directors in Malaysia earned up to 18 million yen, compared with 15 million yen in Japan. China and Singapore were the highest, with both at 27 million yen, followed by Hong Kong at 20 million yen.

“Malaysia is positioning itself as a regional electronics and semiconductor R&D hub, supported by government policy and localization requirements,” Torrens said. “That is creating a lot of fresh demand for senior R&D leaders, which in turn is pushing salaries higher.” In contrast, Japan lagged its regional peers, reflecting relatively slow salary growth despite recent wage momentum. According to the Hays report, 56% of Japanese professionals reported dissatisfaction with their pay — the highest in the region — while 65% said they were considering a career move, also the highest in Asia, with limited career progression cited as the main driver.

Hays attributed this to Japan’s structural characteristics, including its large domestic market and relatively limited exposure to global competition, which allow companies to focus inward and reduce pressure to match international pay levels. Firms also continue to prioritize capital spending over investment in human capital. Torrens added that Japan’s seniority-based system remains a constraint on merit-driven compensation and urged companies to shift more “decisively” toward performance-based evaluation. “As skills become scarcer, especially at the senior level, companies need systems that genuinely differentiate performance and impact, not just tenure,” he said.