Who Is To Blame For Malaysia’s Low Salary Crisis?

ByAzleen Abdul Rahim

Malaysia, a Southeast Asian country known for its vibrant culture and rapid economic growth, has been grappling with a persistent issue of low salaries for years. This problem has been a cause of concern for the general public especially, as the cost of living is outgrowing the monthly income in a big way. Succumbing to this for a short-term period is okay, but if this is going to happen for a long period of time, the government and the policymakers will need to embrace themselves with the reaction from the people. 

Salaries in Malaysia are low. Neighbouring countries such as Singapore and Indonesia already outpaced Malaysia on this in a big way a long time ago. Realising this situation, many talented professionals have left the country and triggering another economic problem for Malaysia known as the brain drain. While it is tempting to point fingers and assign blame, the issue of low salaries in Malaysia is a complex web of interconnected factors that require a comprehensive analysis. Let’s delve into the various elements contributing to this problem and shed light on who can be held accountable.

Inconsistent salary rates

One of the primary factors contributing to Malaysia’s low salary problem lies within its economic landscape. Despite significant growth over the years, the country has been struggling with inequality when it comes to salary rates. A sizeable portion of the population continues to earn low wages due to many factors, including:

  • Geographical location: The cost of living varies greatly across Malaysia, with some areas being much more expensive than others. This means that people who live in more expensive areas may need to earn more money in order to make ends meet.
  • Lack of access to quality education: Not everyone in Malaysia has access to quality education, which can limit their job prospects and earning potential.
  • Limited skill sets: Many Malaysians lack the skills that are in demand by employers. This can make it difficult for them to find well-paying jobs.
  • Over-reliance on low-skilled industries: Malaysia has a large number of low-skilled industries, which tend to pay lower wages than higher-skilled industries.
  • No effort to regulate and standardise salaries: The Malaysian government has not made any effort to regulate or standardise salaries. This means that employers are free to pay their employees whatever they want, which can lead to low wages.

The Malaysian government must shoulder some blame for the low salaries in the country. The government has not done enough to address the factors that contribute to low wages, such as the lack of quality education and the over-reliance on low-skilled industries. The government should take steps to regulate and standardise salaries and invest in education and training so that Malaysians can develop the skills they need to earn higher wages.

Average education system

The Malaysian education system plays a vital role in shaping the nation’s workforce. However, there are concerns about the quality and relevance of education in preparing students for the job market. There is a clear mismatch between the skills that employers demand and those that graduates possess. This disparity puts a strain on salary levels, as employers are less inclined to offer higher wages for skills that are abundant and easily replaceable. On the industry side, employers prefer to pay higher salaries to foreign university graduates than to local ones. Therefore, the education system must be revamped to prioritise skills that are in line with market demands, fostering a more competitive workforce and at the same time increasing the quality and global ranking of local universities to be on par with foreign ones.

Stubborn employers

Another aspect contributing to low salaries in Malaysia is the prevailing employment practices. Many employers have been known to take advantage of a large labour force and abundant choices pool by offering minimal wages, especially in labour-intensive sectors. The almost nonexistent effective labour regulations and weak enforcement of those regulations further exacerbate this problem. These stubborn employers must bear responsibility for their role in perpetuating low wages, putting a lot of effort into making those wages stagnant for as long as possible and should strive to adopt fairer employment practices that prioritise workers’ rights and reasonable compensation. The government must also enforce a law that makes these employers revisit the salary based on the rising costs of living.

In addition, the government should also encourage these employers to provide more training and education opportunities for their employees so that they can be more productive, improve their skills and eventually earn higher wages. That being said, the government should provide more support for these companies so that they can create more jobs and pay their employees better.

Attracting foreign investments with cheap labour cost

Malaysia’s integration into the global economy has both positive and negative implications for its labour market. While foreign investments have created job opportunities, the competition with low-wage countries has led to downward pressure on salaries. Multinational corporations seeking to reduce costs often establish operations in countries with cheaper labour, further dampening salary growth in Malaysia. To address this, the government needs to attract higher-value industries and encourage investment in sectors that promote higher-skilled jobs and better wages. This policy must end immediately, instead, the government should focus on growing the local companies and encourage them to expand regionally or globally.

Questionable implementation of the minimum salary law

Government policies play a significant role in shaping the labour market and influencing salary levels. The Malaysian government has made efforts to address the low salary problem through initiatives such as minimum wage legislation. However, the effectiveness and enforcement of these policies remain questionable. More proactive measures are needed to encourage businesses to invest in higher-value sectors and provide incentives for employers to offer competitive wages. Policymakers should collaborate with industry experts and stakeholders to design effective policies that stimulate economic growth and raise salary levels.

What now?

It is essential to understand that Malaysia’s low salary problem cannot be attributed to a single factor or entity. The issue is multifaceted and requires a comprehensive approach to address it effectively. While the government, education system, employers, and global market dynamics all contribute to the problem, the key lies in collaborative efforts and proactive measures to uplift the workforce. By fostering an environment that promotes skill development, diversifying the economy, implementing fair labour practices, and formulating effective policies, Malaysia can gradually overcome its low salary problem and create a more prosperous future for its citizens.

The government should play a more aggressive role in solving this before it’s too late. Else, the brain-drain problem will remain a problem and it may hit a new level altogether where Malaysia ended up becoming a big loser.  

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