KUALA LUMPUR: Bank Negara believes there is a need to develop a broader wage-setting ecosystem to ensure that fair wages are being paid.
Bank Negara deputy governor Datuk Marzunisham Omar said, “I think that structural reforms are important. To enhance our productivity and create more high-paying jobs.
“At the same time, we do believe that we should start looking at the wage-setting ecosystem in the country.
“Because we cannot totally leave it to the market forces to ensure that wages actually increase and employees are being paid fairly,” he said at a panel session on Managing Inflation, Easing Costs: A Policy Perspective at the Sasana Symposium 2025 hosted by Bank Negara here yesterday.
He pointed out that some countries have adopted differentiated minimum wages based on skill levels.
He believes the collaboration and engagement between employers, employees, and government unions is important in deciding how wages should be increased in the country.
Marzunisham pointed out that the country is caught in this low cost, low wage economic model, which is not sustainable.
“We cannot achieve our competitiveness by keeping our wages low, by keeping our costs low.
“Because there will be other countries that have more abundant labour that will come and challenge us in that.
“So we have to move up the value chain. We have to create more jobs, high skilled jobs. We have to upskill our talent. We have to produce more skilled graduates.
“So these are the supply side factors that we need to address,” he said.
He pointed out that although headline inflation has eased significantly due to timely monetary policy tightening, price levels remain elevated, resulting in diminishing household purchasing power amid moderate wage growth.
“From the first quarter of financial year 2020 (1Q20) to 1Q25, the Consumer Price Index cumulatively increased by 9.8%, while prices for food and beverages rose even higher at 17.5%.
“In contrast, nominal private sector wages per worker increased by only 7.9% over the same period. So, in real terms, wages per worker declined by 1.9%, hence why we are feeling the pressure of the
rising cost of living,” he said.
He highlighted that there is a structural misalignment between productivity gains and wage growth as evident from 1Q22 to 2Q25 data, which revealed that productivity per worker rose by 7.4% but real wages declined during the same period.
Marzunisham said attracting the right kind of investment is crucial to creating high-skilled jobs that lead to high income.
He highlighted that Malaysia recorded very encouraging investment approval numbers in 2023 and 2024, and the percentage of high-skilled jobs in the economy increased to about 30%, an increase from 25% a few years ago.
Marzunisham added that policy interventions are also necessary to ensure the quality of graduates entering the labour market, which has been a primary concern from employers
“Between 2022 and 2023, around 260,000 fresh graduates entered the job market. However, only about 150,000 high-skilled jobs were created annually during that period, resulting in a gap of nearly 100,000.
“That’s why we see underemployment among graduates remaining high - about 36% of our graduates are working in mid-or low-skilled jobs, simply because they cannot secure high-skilled employment,” he said.
Marzunisham also emphasised on the need to reform subsidies because our subsidy system currently is broad-based. So there is a lot of leakage. The subsidies are also highly regressive.
“I think this is a necessary reform that must take place. So that the savings from that can be used more productively. Not only in assisting more targeted groups. But also in preparing the country for the future and enhancing our productivity,” he said.
Meanwhile, Bank Negara believes there is a continued and urgent need for collective action in advancing structural reforms to build the country’s long-term resilience.
‘Structural reforms are not something one institution or individual can tackle alone. It requires a whole-of-nation approach.
“Reforms and policies are not mere ideas on paper. They can make a real difference in the everyday lives of Malaysians,’ governor Datuk Seri Abdul Rasheed Ghaffour said in his welcoming address at the Sasana Symposium.
‘Through panel sessions, fireside chats and workshops, we share not only what we do, but why we do it. From topics like financial literacy and digital assets, to climate finance and even healthcare reforms, these are the building blocks of a stronger, more resilient Malaysia,’ he added.
The two-day event, themed Structural Reforms: Building a Resilient Malaysia, saw discussions centre around key economic and financial issues.
The topics include digital assets, inflation and cost of living, social safety nets, medical and healthcare costs and climate finance.
A key highlight of Sasana Symposium 2025 was the launch of the Digital Asset Innovation Hub by Prime Minister Datuk Seri Anwar Ibrahim.
This initiative aims to stimulate financial innovation in a controlled environment for applicants to test new ideas and provide input to fine-tune regulatory and security frameworks.
This is to support the development of digital assets and the application of leading-edge financial technology in Malaysia.
The event will also witness the launch of the Climate Finance Innovation Lab by the Joint Committee on Climate Change.
