KUALA LUMPUR: The increase in the minimum wage from RM1,500 per month to RM1,700 needs to be viewed from a broader perspective, considering its spillover effects on the national economy and people's income.
UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said every initiative in the 2025 Budget is interconnected, including the minimum wage initiative.
He added that along with the announcement of the minimum wage increase, the government also raised the allocation for the Payung Rahmah programme from RM200 million to RM300 million to help curb inflation, in addition to offering goods at lower prices than the market.
"That is why I say that every initiative in the 2025 Budget is related and has multiple layers.
"A simple example is the first layer of the minimum wage increase to RM1,700, which will support low-income people. The second layer, if we look at the Cash Aid Rahmah (STR), Basic Aid Rahmah (SARA), and so on, there are no citizens in Malaysia with an income of less than RM1,100 per month.
"This means that for those who are unemployed, they receive around RM1,100 per month, but for those working at a minimum wage of RM1,700 plus government assistance, they earn RM2,800 a month.
"That amount is higher than the national poverty line for 2022, which is RM2,660. This government initiative aims to strengthen the lower segment and expand the middle segment in the income pyramid of the people," he said on Podcast Borak Harini titled "Budget for the Benefit of the People" aired on social media by Berita Harian (BH) today.
Other panelists on the Podcast Borak Harini included economic analyst Datuk Dr Nazri Khan and BH economic news editor Kamarulzaidi Kamis, hosted by BH economic news editor Shahrizan Salian.
Mohd Sedek said the government also announced assistance to small and medium enterprises (SMEs) to implement the minimum wage adjustment.
He added that the expansion of mandatory coverage of the Employees Provident Fund (EPF) to non-citizen workers could support investment in Malaysia, considering that the implementation of the minimum wage involves all sectors of employment in Malaysia, including foreign workers.
This is because foreign workers who earn wages in this country have historically sent back nearly 80 percent of their money to their home countries, with official estimates around RM36 billion or RM70 billion unofficially.