Ideal salary should be RM5,000 and above, economist says

SHAH ALAM – The ideal and dignified salary level for both single individuals and families with two children should be above RM5,000, depending on whether they reside in urban or rural areas.

UniKL Business School economist Associate Professor Dr Aimi Zulhazmi Abdul Rashid said that based on data from the Statistics Department (DOSM), the average monthly decent living expenses (PAKW) for a household was recorded at RM4,729 in 2023.

Moreover, he noted that the PAKW in urban areas was higher than in rural areas, at RM5,040 and RM3,631 respectively.

“The B40, M40, and T20 classifications are only based on gross household income and are not an accurate measure to analyse these findings as they do not take into account the actual cost of living.

“Certainly, the figures also vary by state in Malaysia and by comparison between urban and rural living costs.

“Contributing factors include rising inflation rates, usually caused by demand and supply, depreciation of the currency, or Malaysia's dependence on imported food from other countries,” he told Sinar Harian.

He said this when commenting on the issue of wages and cost of living in the country, with a focus on balancing income and expenditure among the people.

In March, Bank Negara Malaysia deputy governor Datuk Marzunisham Omar said the slower growth of workers' wages compared to the rise in prices was one of the causes of the increasing cost of living.

He said since 2019, the nominal wage of each worker only increased by seven per cent, compared to the overall price increase of 9.3 per cent, while food prices have risen by 17.4 per cent.

In addition, the B40 group spent 52 per cent of their income on basic necessities, compared to M40 (37 per cent) and T20 (32 per cent).

On Nov 2, 2024, DOSM also reported that the average per capita national figure for decent living expenses reached RM1,314 per month.

Aimi believed that although inflation is said to be under control, the income level of the people has yet to show any significant changes.

Meanwhile, Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman said the salary proposal was seen as unrealistic given the current economic context.

He said this was due to most employers, especially in the micro, small, and medium enterprise (MSME) sectors, still struggled with stabilising their finances after the Covid-19 pandemic.

He said the rising operational costs, disruptions in global supply chains and changing consumer demand have constrained employers’ ability to offer salary increases without affecting business sustainability.

“In general, any proposal to set a dignified salary at RM5,000 and above does not take into account the current realities faced by employers and the global economic landscape, especially following the implementation of reciprocal tariffs by the United States (US) on exporters, including Malaysia.

“The US imposing a 24 per cent reciprocal tariff on Malaysian products places additional pressure on the competitiveness of the country’s exports, even though it has been deferred for three months. This directly affects company revenues, especially in the manufacturing and export sectors.

“If labour costs also rise sharply, it could cause Malaysian exporters to lose international markets and drive investors to seek countries with more competitive labour costs,” he told Sinar.

Therefore, Syed Hussain believed discussions on wage issues need to be comprehensive, involving the government, employers and workers, and should be based on productivity data and real economic growth.

He also recommended that any salary increases be implemented gradually, in line with productivity gains and employers’ financial capacity.