Half of Malaysian workers earn below decent wage level

Sheridan Mahavera

Workers at a coconut plantation in Perak dehusking fruits. There are fewer young people working at coconut groves as most of them migrate to cities in search of better-paying jobs to cope with rising living costs. – The Malaysian Insight pic by Hasnoor Hussain, February 23, 2019.

ONE in two working Malaysians earns less than RM2,160 a month, below the RM2,700 Putrajaya considers a decent living wage to meet the rise in costs, said Domestic Trade and Consumer Affairs Minister Saifuddin Nasution Ismail.

He told The Malaysian Insight that only half of the country’s 14.5 million workers contribute to the Employees Provident Fund (EPF), noting that 30% of the seven million contributors earn less than RM1,000 a month. 

“These worrying numbers are a challenge for the Pakatan Harapan administration as it attempts to fulfil its promise of helping Malaysians cope with the rising cost of living.

The earnings of Malaysian workers have plateaued, while the cost of living has steadily gone up. And PH took over at this very challenging time.

“When I graduated in 1987, my starting pay as an estate manager was RM1,700 a month. My daughter recently graduated, and her pay is RM2,500. So in 30 years, the rise in salaries for new graduates is just RM800.”

According to EPF data, 85% of contributors earn less than RM4,000 a month, while only 3% make more than RM10,000.

The picture is just as bleak when it comes to the EPF savings of low-income Malaysians, said Saifuddin.

Only half of Malaysian workers contribute to EPF. And about 70% of these contributors have savings that will not last for more than five years when they reach 55 – the age when they can take out their accumulated deposits.

This means EPF depositors who cash out at 55 have enough money to last them only till 60. The average lifespan of Malaysians is 79 due to better standards of medical care.

Domestic Trade and Consumer Affairs Minister Saifuddin Nasution Ismail says wages have not increased in tandem with the rise in the cost of living. – The Malaysian Insight pic by Kamal Ariffin, February 23, 2019.

Saifuddin said the strain of providing for these retirees will only increase, as by 2030, the number of active Malaysian workers contributing to the economy and the government’s coffers will be lower than those who are no longer productive.

“Tackling these issues will require wide-scale structural reforms to the country’s economy, which has, for decades, been dependent on cheap foreign labour.”

Experts have stated that such dependence on low-salaried foreign labour has depressed wages for Malaysians, he said.

“This is why PH’s promise of raising the minimum wage is very important,” said Saifuddin, referring to the RM1,500 that the coalition pledged in its election manifesto.

However, after much debate and consultation with stakeholders, an increase of RM100 to RM1,100 was announced in Budget 2019.

Besides the minimum wage, the government is also focusing on long- and short-term measures to increase incomes and reduce the cost of living.

The long-term measures include reducing the number of foreign workers and increasing social protections, such as affordable medical care and the EPF scheme for housewives.

Saifuddin’s ministry is focused on short-term initiatives, such as expanding the list of year-round price-controlled items and giving out targeted petrol subsidies.

“The long-term structural problems require a holistic approach to tackle, and we cannot work in silos.” – February 23, 2019.

The families of lumber workers seen in Keningau, Sabah. By 2030, the number of workers contributing to the economy will be lower than those who are no longer productive. – The Malaysian Insight pic by Irwan Majid, February 23, 2019.

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