KUALA LUMPUR: The minimum wage should be increased to RM1,600 or as the recommended living wage estimates, says an economist.
Malaysian University of Science and Technology's economic professor, Geoffrey Williams, said to keep up with inflation, the minimum wage should be raised to approximately RM1,600, although he notes that this figure is still too low.
He said it should ideally be increased in-line with living wage estimates from entities such as Bank Negara Malaysia, Department of Statistics Malaysia or the Employees Provident Fund's Belanjawanku.
This would place the minimum wage at RM2,500 to 3,000 for a single person.
"There is a need to review the minimum wage because the cost of living has risen significantly since the last revision, and the RM1,500 per month level is too low and below most reasonable poverty indicators.
"Actually the minimum wage should simply be fixed to inflation and rise each year according to the cost of living. Then we would avoid the complications of biannual reviews and the conflicts between employers, employees and the government," he said.
Yesterday, Human Resources minister Steven Sim said the government will review the minimum wage this year, taking into account the views of both employers and employees.
He said the review would be based on the National Wages Consultative Council Act 2011.
According to the Minimum Wages Act 2012, the minimum wage should be reviewed at least once every two years to ensure it remains fair and appropriate, taking into account economic conditions and cost of living adjustments.
The current implementation of the RM1,500 minimum wage began on May 1, 2022.
Williams also cautioned businesses that pay less than the minimum wage, warning that they stand to lose more employees.
"Most businesses are already paying above the minimum wage. Those that pay less do not have a viable business model and should change their approach or shut down.
"Unless companies rethink their pay rates they will continue to struggle to find employees, and people will leave for the gig-economy where even the most basic jobs earn more than RM1,500.
"Wages are not linked to productivity in Malaysia. They depend on power in the labourforce," he said.
Meanwhile, Putra Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff proposed that the government look into the minimum wage revision based on the needs of each industry.
Some of the areas that they could look into include the sector, size of companies, location of the business, number of workers and other relevant criteria.
"I don't think it's suitable to impose a blanket wide increase of minimum wage at the moment, but focusing on industries that can afford to increase it.
"Some companies are already paying their workers higher than the minimum wage, and it's just a matter of ensuring that other companies with similar profiles do the same.
"We do not want companies still paying low salaries even though their counterparts have been paying higher salaries to their workers," he said.