Are You Paid Enough For Your Work?

How much do Malaysians earn? Take a guess.

What is the median monthly salary of a Malaysian worker? Clue: It is not that high.

Data shows that the median monthly salaries and wages in Malaysia for 2013 was RM600 more than the minimum wage, in other words, half of the Malaysian workers make less than RM1,500 per month — average wage is slightly higher at RM 2,052.

The figure is the same regardless of gender, but if you worked in the urban areas, your median wage will be slightly higher, at RM1,680 compared to RM1,040 for rural workers.

These figures, sourced from the Department of Statistics, are based on wages received by full-time government or private employees, which cover basic wage, cost of living allowances and other regular and guaranteed paid allowances or overtime.

However, they exclude bonuses and gratuities and other non-regular payments.

(Higher) Education Pays

The median monthly wage for those with tertiary education is the highest compared to other educational qualifications.

Those with a degree would have a median wage of RM3,890, which is 159% or RM2,390 higher compared to those with Malaysian Certificate of Education (SPM).

The earning capability of a graduate is quite high, especially if one compares the degree “premium” to high school certificates.

Workers with SPM qualifications would earn a monthly median wage of RM1,500, or about 25% higher than those with lower secondary education, ie Lower Certificate of Education (PMR/SRP). In nominal terms, that is a difference of RM300 per month.

Best Paying States

The highest paying states, unsurprisingly, are Putrajaya and Kuala Lumpur. In fact, these are the only two states where the median wages are more than RM2,000 per month.

The majority of states — 10, to be exact — pay half of their workers less than RM1,500 per month. Even Penang, which ranked third in the list of the richest states based on gross domestic product per capita, has a lower median wage compared to Johor and Negri Sembilan.

On the opposite end, Sabah tops the chart with the lowest median monthly wage, followed by four of the five former Unfederated Malay States.

Wage Growth Remains Positive

While the national median wage seems low, it is actually a 15% increase compared to 2010, when the median monthly wage was RM200 lower, or at RM1,300.

In fact, the median wage outpaced the rate of inflation, which went up by 7% during the same period. This indicates that the spending power of workers remains in positive territory, although certain consumer items, especially main food items, have gone up more than 15% since 2010.

Rural workers were luckier compared to urban workers, where the former saw their median wage jumped by 16% versus 12% for the latter, partly due to an increase in commodity prices and government income transfers.

Wages are Low Because Workers are Lazy?

As pointed out in the “State of Household s”, Khazanah Research Institute’s inaugural publication, the low paying jobs are partly due to the fact that the majority of our workforce, or 6.6.million workers, is low skilled, and only a small number (24%) has post-SPM qualifications.

Another key factor, which is equally important, is that firms in Malaysia, for lack of better word, pay very little to their employees. This is clearly seen from the distribution of the national income; only 32.9% goes to workers — just slightly higher compared to India — while the rest goes to owners.

Compared to other countries, Malaysia’s share of wages is considered low; Singapore 42.3%, China 48%, the UK 55%, and the US 55.7%. The argument, henceforth, is simple; Malaysian workers’ productivity is low.

This is not supported by facts. In fact, the opposite is true. The recent Malaysia Human Development Report published by the United Nations Development Programme shows that “wages has not kept up with labour productivity… they began to diverge seriously… from 1996 to 2010”.

The report explains the reason why wages remain low in Malaysia: “Labour’s inability to maintain its compensation relative to its productivity is possibly one reason why real wages have been stagnant…” In other words, firms do not pay the workers fairly.

Moving forward, it is critical that in our march towards developed nation status by 2020, our economic policy must be strategically geared to promoting and creating industries that are high value-add and pay well.

It is also imperative that labour market interventions are required to ensure our workers are reasonably compensated. After all, research has proven that a happy worker is a productive worker. It also finds that happy employees also equal better profits.

It is a win-win for all.

Source: The Malaysian Reserve 9 March 2015. Link here