BNM Deputy Governor: Malaysian businesses need to attract high quality investment to sustain improvement in minimum wage
31 Mar 2022
Businesses in Malaysia need to attract high quality investment that will create high-skilled jobs in order to ensure improvements in the minimum wage could be sustained, said Bank Negara Malaysia (BNM) Deputy Governor Datuk Abdul Rasheed Ghaffour.
He said that structurally, Malaysian workers have lower bargaining power which has resulted in workers being paid lower compared to productivity gains.
“The minimum wage is an important policy that serves to ensure workers can afford necessities in the country, hence we need to shift towards raising income in a sustainable manner that requires structural reforms to be in place,” he said at the 2022 BNM Governor’s Address and Panel Discussion Webinar today.
He noted that wages in Malaysia have remained below actual productive worth and workers tend to receive a lower share of the national income.
“Therefore, improvements in labour markets are expected to support household spending with continued improvement in both employment and income growth,” the deputy governor said.
He highlighted the need to impose a multi-tiered levy as a market-based tool to reduce reliance on low-cost foreign workers and that enhancing active labour market policies (ALMPs) is crucial to ensure the sustainability of wage improvements.
Meanwhile, Socio Economic Research Centre executive director Lee Heng Guie said the government need to work together with the industry in addressing issues arising from the steep increase in the minimum wage before its implementation in May.
“We need to really consider that the world is in the post-pandemic phase and the recovery is still very uneven. Not all sectors are recovering at the same speed with various challenges coming in,” he said.
Earlier this month, Prime Minister Datuk Seri Ismail Sabri Yaakob announced that the government had agreed to increase the minimum wage to RM1,500 and this would be implemented nationwide for certain companies effective May 1, 2022.
The last time the minimum monthly wage was increased was on February 1, 2020, when it went up by RM100 to RM1,200.