Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on February 20, 2019

KUALA LUMPUR: Malaysia’s inaugural National Wage Index (NWI), launched yesterday, shows that total wages grew 9.2% in Malaysia between September 2016 and June 2018.

However, the pace of this growth has been on a downward trend year-on-year (y-o-y), the data showed.

“[This was] due to falling commodity prices and a decline in construction [projects],” said Lee Chee Sung, adviser to the Institute of Labour Market Information and Analysis (ILMIA), which compiled the index.

Sector-specific data on total wage growth confirms this trend. In the quarter ended December 2017, the plantations sector was the only sector to record an absolute decline in total salaries. Wages were down 6.2% y-o-y, the data shows. Crude palm oil futures declined to a three-month low of RM1,966 per tonne in November 2017.

The NWI, which has so far compiled data for six consecutive quarters up to June 2018, is expected to be used as a benchmark by employers and workers to assess their salary increments and market value, according to the human resources ministry.

It will also enable the government to monitor salary adjustments and revise the minimum wage in the future, Human Resources Minister M Kulasegaran said at the launch.

“The development of the NWI is in line with the government’s efforts to strengthen the labour market in Malaysia in terms of reforming the workers’ salary structure to be fair and more transparent.

“It is my hope that the NWI will be effective and referred to as a guide to employers and investors in drawing up the structure and level of wages for their workers,” he said.

The NWI, to be published by ILMIA on a quarterly basis, distinguishes between the basic wage rate and total wages, the latter of which include allowances, bonus, incentives and overtime payments.

The NWI’s data so far showed that basic wages have a much steadier growth rate compared to total wages, with growth of between 4.6% and 5.1% y-o-y in each quarter.

Employers urged to hire people above 60

Separately, the government has called on employers in Malaysia to hire or retain employees that are above the retirement age of 60, saying that their experience and talent should not go to waste as they can still contribute to the country’s economic growth.

“I’ve already told my agencies to retain and give more flexibility in working hours to those above 60 who want to continue working,” Kulasegaran told reporters after the launch.

He acknowledged criticisms concerning the high youth unemployment rate, but said that there must be a “balance” between fresh graduates and experienced workers within an organisation.

“ILMIA’s research shows that we can give those over 60 more [employment opportunities],” Kulasegaran said.

He also said the government would focus on increasing the participation of women and disabled persons in the workforce, adding there is a need to find a “win-win” situation to encourage employers to increase the employment of women, including homemakers.

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