WAGES for workers above 35 grew by 4% last year, said an Employees Provident Fund (EPF) senior official, even as many complained that salary growth stagnated in 2017.

However, the fund’s economies and capital markets general manager, Nurhisham Hussein, said this trend was not repeated among employees younger than 35.

“We are still trying to find out what is driving this, as the data is very recent,” he told the audience at the Malaysian Income Distribution in a Global Context forum, organised by the Khazanah Research Institute (KRI), today.

“What we are seeing is, wages are increasing, but not across the board.”

EPF, which takes contributions from private sector workers, is seeing salary increases for the bottom 40% (B40) of Malaysians and the top 20% (T20) of wage earners.

“But, wage growth is quite poor among the M40 (middle 40%), depending on their age,” said Nurhisham.

The slow rise in wages compared with the inflation rate, which averaged about 4% last year, was a common complaint among Malaysians in 2017.

Business consultant Kerry Hay Group estimated that average wages grew by only 1.3% last year.

Economist Azrul Azwar Tajudin predicted that the trend of wage growth not keeping up with the rise in the prices of goods would continue this year.

Nurhisham said the rise in wages did not automatically translate into more social mobility for workers.

Although the average Malaysian had a good chance of doing better than their parents, he said, it was still highly possible for them to stay in the same socio-economic class throughout their lives.

“Mobility within a generation is poor. For instance, if you are a B40 worker, there is a 50% chance that you will continue to remain in that class.

“If you are a T20 earner, there is a 60% chance that you will stay within that income group. So, where you start off matters.”

Wage growth is the common theme at the forum, which aims to analyse Malaysia’s efforts in reducing income inequality, a key policy of the government.

Studies by KRI have shown that inequality, as measured by the Gini coefficient, has decreased from 1970 to 2016.

KRI head of research Dr Allen Ng said on a scale of 1 (more unequal) to 0 (less unequal), the coefficient had been reduced from 0.5 in 1970 to 0.399 in 2016.

He said in 1970, T20 households earned nine times the income of B40 households, and in 2016, the difference was reduced to 5.6.

He said one of the main reasons for the decreasing inequality was the steady rise in incomes for the B40 and M40 groups. – January 18, 2018.