Adopt Living Wage and Upskill Workers

As we celebrate labour day, we would like to draw the attention of policymakers, employers and other key stakeholders on the plight of Malaysian employees who are earning income below the minimum standard required for decent living. 

Malaysia has ratified the International Labour Organisation (ILO) Convention on Decent Work – the 2030 Agenda for Sustainable Development. Decent work sums up the aspirations of people in their working lives.

It involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for all, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all.

Decent work would alleviate Malaysians from poverty and fulfill Malaysia’s aspiration into becoming a knowledge economy. 

In line with these aspirations, we believe there is a need for serious actions to be taken to address income gaps in Malaysia, with focus on the low-skilled workers, including those who earn their income in the sharing economy. 

Even though Malaysia has already adopted minimum wage (RM1,500 per month as per the Minimum Wages Order 2022), this is still low relative to the cost of living.  A more appropriate benchmark for decent living standard is living wage.

According to Bank Negara, living wage is an income level needed for a household to afford a minimum acceptable living standard, which includes the ability to participate in society, the opportunity for personal and family development, and freedom from severe financial stress. 

Living wage considers changes in the cost of living for different states, household size and other relevant factors.

Adoption of living wage is justified, considering that an analysis of the wage to productivity ratio by the Bank Negara shows that Malaysian workers are still being paid less than workers in benchmark economies such as United States of America, United Kingdom, Australia, Germany and Singapore. 

Therefore, we recommend for the government to develop a clear roadmap to encourage employers to adopt living wage. Adoption of living wage ensures decent standard of living for all Malaysians, which will contribute to improvement in the overall wellbeing. 

In addition, there is a pressing need to improve the opportunity to upskill and reskill low-skilled workers so that they would be able to earn better income and improve their livelihoods.

The HRDFCorp fund allocation should be prioritized to this group of workers, with focus on the Small Medium Enterprise (SMEs), considering that SMEs employ 70% of the country’s workforce.

This is not only important as part of a recovery effort in the post-pandemic phase, but also in addressing poverty, income disparity, productivity and competitiveness in the medium and long terms. 

We believe these recommendations would do well in improving resilience and contributing towards inclusive and equitable growth for Malaysia Madani, which is based on humane values and compassion (rahmah). 

Mohammad Abdul Hamid & Dr Lilis Surienty Abdul Talib
Economic Prosperity Cluster
Pertubuhan IKRAM Malaysia 

Malay version: https://ikram.org.my/laksana-upah-wajar-tingkatkan-kemahiran-pekerja/

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