PETALING JAYA: While keeping the prices of goods and services stable remains a core priority for policymakers, ensuring that incomes rise in tandem is equally critical.
The Bank Negara Malaysia Annual Report 2025 noted that the real challenge lies in ensuring wage growth keeps pace with inflation.
From 2019 to 2024, the headline consumer price index increased by 9.3%, while nominal wages per worker grew by just 7.2%, Bank Negara Malaysia (BNM) highlighted.
“In other words, this means that the average person must work more hours to afford the same basket of goods,” it stated.
The central bank noted that in the case of food, as prices have risen faster than wages in recent years, households must now work longer just to meet their usual food expenses.
For instance, bottom 80% households have to work longer to afford their typical food consumption.
“Bottom 40% households allocate a larger share of their income to food, 30% more compared with 22% for middle 40% households and 16% for top 20% households,” it detailed.
While prices play a central role in guiding economic activity, BNM stressed that preserving households’ purchasing power also depends heavily on income growth.
It added that a comprehensive reform agenda is needed to address persistent gaps in the labour market, raise productivity, and create more opportunities for better-paying jobs.
“Recent income measures, such as revisions to the minimum wage, have helped to ease the burden of more than five million workers in Malaysia,” it added.
Notably, BNM also emphasised the need to create more high-skilled, high-paying jobs.
“In 2025, high-skilled jobs made up only 26% of new positions, lower than the five-year (2020-2024) average of 30%,” it said.
The central bank therefore called for greater industrial upgrading, noting that helping firms move into more complex, high-value production is essential to address Malaysia’s slow shift from low-to high value-added industries, limited technology adoption, as well as low research and development investment.
“Initiatives such as the National Industrial Masterplan and the National Investment Aspirations aim to attract higher quality investments, promote technology-intensive production and generate more high-skilled jobs.”
BNM also noted that supply-side reforms, such as advancing education and training systems, are equally important to help the workforce deepen industry linkages and expand opportunities for lifelong learning.
“Without addressing these underlying conditions, wage growth could continue to lag price increases, leading to an erosion in living standards over the long term,” it said.
