KUALA LUMPUR, July 15 – Referring to the statement by the Malaysian Employers Federation (MEF) on the role of the Ministry of Economy in wage policies, the Ministry of Economy is responsible for overseeing comprehensive economic planning in the country. The issue of unequal wages relative to the cost of living is a key barrier to Malaysia’s transition towards a high-income economy. Dependence on low-skilled workers is one of the factors resulting in wages that do not align with the value of their contributions to the economy.
The ratio of workers’ wages (Compensation of Employees, CE) to Gross Domestic Product for Malaysia in 2019 was 35.9%, significantly lower than other advanced countries such as Germany (59.4%), the United Kingdom (55.5%), Australia (46.9%), and the Republic of Korea (46.8%). The real median wages and entry-level wages have declined after the pandemic and remain lower compared to pre-pandemic levels. The mandate of the Ministry of Economy is to address structural issues that may hinder the country’s economic growth.
Wage growth is among the key focuses of structural reforms to achieve the country’s CE targets, as stated in the 12th Malaysia Plan. The Ministry of Economy is collaborating with the Ministry of Human Resources to develop several policy options to be presented to the National Economic Action Council (NEAC), which will discuss the best strategies to enhance workers’ wages. The final details and mechanisms of the policy will be decided based on comprehensive considerations.
Including the capacity and cost implications for the private sector, phased implementation sequencing, and a tripartite agreement among the government, employers, and workers. Engagement sessions with key stakeholders, namely the government, employers, and workers, will also be conducted to gather input from all parties. While efforts to improve other aspects of economic structure continue, the Ministry of Economy will emphasize the fair increase in workers’ wages for the benefit of all parties involved.