Should the minimum wage in Malaysia frequently increase?
Are You Hiring?
Find candidates in 72 Hours with 5+ million talents in Maukerja Malaysia & Ricebowl using Instant Job Ads.
Hire Now
Khazanah Research Institute (KRI) stated that the minimum wage in this country should increase regularly, either with median wage level or inflation.
In the organisation's latest publication titled "Starting Point Matters: Low Wages in the Job Market", researcher Siti Aiysyah Tumin said that strengthening wage policies is crucial to ensure all workers' wellbeing.
She said that the government only introduced the minimum wage in 2013, and the country has a long way to go to ensure that every worker receives at least RM1,200-1,500 salary.
The International Labour Organisation's latest review on worldwide minimum wages reported that the average minimum wage is around
- 55% of the median wages in developed nations, and
- 67% of the median wages in developing and emerging nations.
.jpg)
Since Malaysia's minimum wages are at Rm1,100 and RM1,200, they are only about 45% to 49% of the median salaries, lower than the cited global average.
Siti Aiysyah said that the government should consider revising the minimum wage to a higher level. If Malaysia sets the minimum wage to 55% of the median salary, using developed countries as the benchmark, the amount is around RM1,343.
She said that while the purpose of minimum wage is to protect the low-paid and most vulnerable workers, the government should also push the average and median wages higher.
The researcher noted that linking productivity to income is one way to boost wages. However, low take-up rates of the productivity-linked wage system by employers warrants more analysis.
She said wage levels should also aim to be living wages, which pay workers such that they are able to live a dignified life.
"The government plays an important role to direct this recovery, while decent work with equitable pay and inclusion in social protection schemes, among others, has to be the priority of the various growth-enhancing initiatives introduced by the government," she said in the report.
Statistics department's report
The Statistics Department chief statistician Datuk Seri Dr Mohd Uzir Mahidin said fresh graduates recorded a drop in monthly salary where most of them earned from RM1,001 to RM1,500 in 2020 compared to RM2,001 to RM2,500 in 2019.
KRI emphasised that the figure was shocking, considering since February 2020, the minimum wages for a worker are RM1,200 in selected cities and municipal council areas and RM1,100 everywhere else.
The organisation also said low wages among graduates are a long-standing labour market problem that predates the COVID-19 pandemic.
According to KRI's 2018 research, "Youth Transitioning from School To Work", the average reservation wage for young employees was RM1,555, with their actual salary being RM1,846.
KRI's expectation is realistic, given:
- The current minimum wages,
- Allowance of graduate apprenticeship programmes (RM2,000 for the former Skim Latihan 1Malaysia, now 'Protégé'),
- Living cost estimates for a single person in Klang Valley (from RM2,490 to RM2,700).
This research also reported wage offers by employers were:
- RM1,270 to RM2,066 for technical and vocational education and training graduates, and
- RM1,703 to RM2,682 for graduates with a Bachelor's degree.
The study said that though one might suggest graduates to invest further in higher postgraduate qualifications for better employment prospects, employers do not offer significantly higher wages for new employees with this academic background.
Source: The Malaysian Reserve
Articles that might interest you
Low Monthly Wage Has Become the Norm for Local Fresh Graduates
HR Guide: How to Create a Hybrid Workplace Arrangement
Hybrid Workplace Arrangement: What It Is, The Good and the Ugly