Malaysia’s wage policy remains reactive amid rising living costs, leaving low- and middle-income earners with diminished purchasing power, says Dr Mohamad Idham Md Razak of UiTM. Despite annual productivity gains of 3.5% from 2010 to 2020, real wages only rose 1.1%.
Wages Lag as Malaysia Risks Being Trapped in Middle-Income Bracket
He attributes wage stagnation to outdated labour laws, weak union representation, and overreliance on low-skilled, migrant labour. The shift to low-value manufacturing in the 1980s reinforced a low-wage model.
With 1.7 million Malaysians working abroad, he warns Malaysia is stuck in a middle-income trap. He urges reforms like productivity-linked wages, sectoral minimum wages, and stronger vocational training.
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