Need to move faster towards higher wages

THE usual laudatory statements from captains of industry, key opinion leaders and subject matter experts following the tabling of the federal budget are an annual exercise in which the noise often drowns out what is relevant to the vast majority of citizens – we just want to know what’s in it for us, especially when the economy seems to be chugging along decently and the lingering impact from the Covid-19 lockdowns seems to have mostly dissipated.

Against the backdrop of a higher cost of living, higher wage scales are the best antidote for the pain of ordinary workers who have to deal with inflation eating into their take-home pay.

And yes, this includes the T15 (top 15%) income bracket group with household incomes averaging RM12,000 monthly – even the lower reaches of the T15 income bracket have been affected, albeit not as badly as those in lower brackets, perhaps.

A hike in the minimum wage is always welcome, but the rise to RM1,700 from RM1,500 announced is not bold enough.

A figure of RM2,000 was bandied about before the tabling of the budget, but sadly this did not materialise.

Local media, including The Star, has reported on the gap between wages and the cost-of-living issue numerous times.

Can the government raise the wage share of national income (that is, the amount of GDP paid out in wages, salaries and benefits) to 45% by 2035 from 32.4% in 2022?

It seems very gradual and has been beset by intense pushback from businesses.

While understanding that a gradual approach is less risky and that economic growth as well as productivity and market forces should play a role in determining wages, Malaysia’s wage share of national income as an upper-middle-income country should be higher as it aspires to join the OECD (Organisation for Economic Cooperation and Development) club of rich nations, where the average labour share of national income is well over 40%.

It is no wonder that many still prefer to work abroad in countries where wages are higher and where the currency is stronger.

Never mind the minimum wage; we need to know if there are steps being taken to move toward a living wage.

Through the Madani economy framework, the main platform for this could be the Progressive Wage Policy (PWP).

But this seems to have gotten off to a rocky start, although it is encouraging that the initiative to reskill or upskill workers to enable them to earn higher wages will be fully implemented next year.

Perhaps the PWP could do with a much higher allocation than the RM200mil allocated on Friday to benefit 50,000 workers.

To have momentum, much larger allocations benefiting many more workers are needed.