PETALING JAYA: The minimum wage in the country should be at least RM2,000 monthly to cover basic living expenses in the current economic climate, say economic experts and labour players.
Leading economist Dr Geoffrey Williams said based on the inflation of the minimum wage since the last increase, the new minimum wage should be around RM1,600, but this is too low because with statutory deductions for Employees Provident Fund (EPF), Social Security Organisation (Socso) and Employment Insurance System (EIS), the take-home pay is below the poverty line.
The founder and director of Williams Business Consultancy Sdn Bhd added that it was important to include other considerations including the minimum wage for civil servants, which at RM2,000 served as a benchmark.
Cost factor: (From left) Williams, Nik Maheran, Arutchelvan and Syed Hussain highlight the growing concerns regarding wage adequacy to sustain the average cost of living.
“The minimum wage for the Progressive Wage Pilot Policy scheme is RM1,810 but again this is too low.
“Bank Negara also estimated a living wage of RM2,700 in 2018 that would now be above RM3,000 taking inflation into account.
“So we need to look beyond the RM2,000 amount and aim for RM2,500 and RM3,000 per month ideally,” he said when contacted yesterday. However, he admitted that employers in the country would oppose the idea of increasing the minimum wage at such rates.
“A simple solution is to remove all the restrictions on the Progressive Wage Model and Sumbangan Tunai Rahmah (STR) and pay employees the RM200 or RM300 Progressive Wage Model amount directly through the Inland Revenue Board and the Padu system.
“This means the minimum wage would be RM2,200 and it would be topped-up to RM2,500 through the reverse income tax credit. This would help employees and employers directly and efficiently without wastage, leakages and corruption. It is a form of Universal Basic Income,” he proposed.
Prime Minister Datuk Seri Anwar Ibrahim is expected to announce the details of the civil servant salary adjustment mechanism at the 19th Majlis Amanat Perdana Perkhidmatan Awam event on Friday.
On Sunday, Malaysian Trades Union Congress (MTUC) called for a hike in the minimum wage, saying that RM1,500 was unreasonable due to the rising cost of living.
Economist Datuk Prof Dr Nik Maheran Nik Muhammad said the RM1,500 minimum wage in Malaysia was introduced in 2022 to provide a living wage for workers, especially those from low- income households.
However, with inflation and the rising cost of essential goods and services, she agreed with MTUC’s argument that RM1,500 is no longer sufficient.
“For instance, rent, utilities, food, transportation and healthcare costs have all seen steady increases, particularly in major cities like Kuala Lumpur, Penang, and Johor Baru.
“Many families struggle to make ends meet, leading to growing concerns about the wage’s adequacy.
“When comparing Malaysia’s minimum wage with other Asian countries, Singapore, one of Asia’s wealthiest nations, does not have a fixed minimum wage across all sectors but sets a progressive wage model for certain industries, often resulting in wages that far exceed Malaysia’s RM1,500.
“For example, cleaners in Singapore can earn up to SG$1,300 (RM4,300) monthly,” she said.
She said that a balanced approach should be taken, considering the needs of both employees and employers will be crucial in ensuring sustainable economic growth and improving the quality of life for all Malaysians.
“The government, employers, and labour organisations must work together to find a solution that benefits everyone in the long run,” she said.
Parti Sosialis Malaysia (PSM) deputy chairman S. Arutchelvan also agreed that the current minimum wage is outdated and irrelevant.
He said minimum wage should be reviewed once every two years, he said.
“The Madani government said that minimum wage for civil servants would be around RM2,000 and the Prime Minister also asked the private sector to follow suit.
“So, RM2,000 should be the yardstick on minimum wage,” he said.
Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman said in any decision to increase the minimum wage rate for the private sector, the employers’ ability to implement the new minimum wage rate is the most important criteria.
“If the new minimum wage rate is set at a high level but the employer is unable to implement it, this will cause undesirable effects, especially when the employer decides to not continue operating,” he warned.
