INCREASINGLY, Malaysians feel the pinch of the pandemic and inflation. They complain their monthly salaries are insufficient to purchase daily necessities and pay bills.

Although the inflation rate has eased from 4% in November 2022 to 3.8% in December 2022, the prices of food and beverages are higher than in pre-pandemic days. Rice, bread and other cereals, meat and milk, cheese and eggs are among the three food and beverage subcategories that recorded an increase of more than 7% in inflation, in the final month of last year. 

The ongoing Russia-Ukraine war has put Malaysia in a more vulnerable position. The country has become overly reliant on imported food items after Malaysia turned to industrialisation in 1970s.

Notwithstanding, industrialisation accelerated the development major cities such as  Kuala Lumpur, George Town, Johor Baru, Kota Kinabalu and Kuching. Yet, the country remains stuck in the low-wage, low-cost economic model, with a high influx of low-skilled foreign labour.

During a recent interview, Deputy Human Resources Minister Mustapha Sakmud said his monthly salary was only RM1,800 despite engineering being already a highly skilled profession in 1993. When his son graduated with an engineering degree in 2019, the starting salary increased merely by 28% (RM2,300) compared to two decades ago.

My friend working as an ophthalmologist in a public hospital said that he only could earn RM14 per hour when working overtime or on call for 24 hours during the weekdays. It is even worse on the weekends – only RM9 per hour.

How will fresh graduates survive with the surging cost of living? If employers did not provide salary increments during the past few years of the pandemic, how could employees manage their expenses with a shrinking disposable income? 

Many contract medical officers are leaving Malaysia for good due to low wages, poor facilities at public hospitals and clinics, and bleak career prospects. Young Malaysians who pursue degrees overseas also made up their mind not to return to their home country after graduation as they could earn at least two to three times more than the salary they would earn in Malaysia.

As many skilled and talented Malaysians opt for greener pastures, the country faces a serious brain drain. The Human Resources Ministry said Singapore has almost one million Malaysian workers, followed by Australia, the United States, the United Kingdom and Canada.

Earlier, the Bank Negara Malaysia said the living wage for an adult in Kuala Lumpur, in 2018, was RM2,700. It would not come as a surprise if the current desired living wage raises by 25% (i.e. RM3,375).

Prime Minister Anwar Ibrahim has pledged resolve the escalating cost of living in the country but what government really needs to look into is meeting the people’s living wage and not just setting a minimum wage. The living wage is a benchmark to match against one’s actual cost of living.

The Bank Negara defines the living wage under its report “The Living Wage: Beyond Making Ends Meet” (2018) as the wage level that could afford the minimum acceptable living standard (see info graphic).

As more middle-income earners fell into the lower-income category during the pandemic, there is an increasing concern that more Malaysians may only be able to afford basic needs. Some recently pleaded with the unity government to allow another round of EPF withdrawal.

Economy Minister Rafizi Ramli has indicated the issue of insufficient high-skilled, high-paying job opportunities to be a good sign. Nevertheless, to ensure that high-skilled jobs are associated with good remuneration packages, he has to pay attention to existing labour laws and revise them accordingly.

In particular, the Employment Act 1955 remains associated with a time-based wage system instead of a productivity-linked one. Adopting a productivity-linked wage system would raise the country’s overall salary level, boost employee morale and be more reflective of the current standard of living.

When Malaysians are able to secure high-skill, high-income employment within their country, they would be less likely to seek better job opportunities elsewhere. – February 22, 2023.

* Amanda Yeo is a senior fellow at Pacific Research Center.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.