Elevating wages key component of Malaysia’s new economy plan

Over the next decade, the government will focus on raising minimum wage to match costs of living, as well as increasing female workforce representation.
By: | July 31, 2023
Topics: Compensation and Benefits | DE&I | Malaysia | News

Uplifting wages and improving the overall quality of life of Malaysians will form the cornerstone of a new economic strategy aimed at catapulting Malaysia into the ranks of the world’s top 30 economies within the next decade.

Unveiled by Malaysian Prime Minister Anwar Ibrahim, the Madani Economy plan outlines key initiatives that will drive economic transformation. One measure includes the establishment of a special financial zone in the Iskandar Malaysia region in Johor. This zone is expected to attract international investors and knowledge employees through tax incentives and expedited immigration processes.

Additionally, the plan entails a review of minimum wages, with the goal of elevating the living standards of employees across the nation.  According to Anwar, almost half of the employees in Malaysia currently earn less than RM2,250 (US$495.05) monthly. He expressed concern over this disparity and proposed that 45% of the country’s GDP should come from wages, up from 32.4% in 2022, to align Malaysia with developed economies where wage shares are typically higher than half. As part of this effort, the government will review the minimum wage level and explore the implementation of a progressive wage model to foster income growth.

READ MORE: Malaysia proposes progressive wage model to bridge salary gap

Moreover, the government aims to address gender disparities in employment by increasing the representation of women in the workforce from the current 53% to 60%.

The Prime Minister also emphasised the importance of ensuring equitable wealth distribution, which the Madani Economy plan hopes to achieve with the allocation of RM100 (US$22) in e-wallet credits to all adult Malaysians earning an annual income of RM100,000 (US$22,002) and below, benefitting over 10 million people. Additionally, certain civil servants, military veterans, and pensioners will receive bonuses of RM300 (US$66) and RM200 (US$44), respectively, reported The Straits Times.