PETALING JAYA: A recent talk on “Living wage and International Labour Organisation (ILO) key wage setting principles” organised by the Malaysian Employers Federation (MEF) reiterated that the living wage in the country is far above the minimum wage of RM1,500 set by the government.

MEF president Datuk Dr Syed Hussain Syed Husnam told theSun that Bank Negara Malaysia estimated a living wage of RM2,700 for single adults in Kuala Lumpur, RM4,500 for couples without children and RM6,500 for couples with two children.

“The living wage in rural areas or small towns is low due to the affordable cost of living.

“Although it is pertinent that Malaysians earn a decent living, the minimum wage is influenced by principles of supply and demand within the labour force.”

He said oil and gas companies that are doing well usually pay above minimum wage, “but 97% of Malaysian businesses are small and midsize enterprises that just make ends meet and struggle with payrolls.”

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Syed Hussain said the Living Wage Agreement was reached during a meeting of experts on wage policies in February, and endorsed by the ILO Governing Body at their session on March 13.

“The concept of a living wage refers to the wage level necessary to afford a decent standard of living for workers and their families, taking into account the country’s circumstances and the work performed during normal working hours.

“It should not be one-size-fits-all but achieved through wage-setting processes in line with ILO principles, such as strengthening social dialogue, collective bargaining and empowering wage-setting institutions.

“Instead of recommending the government raise the minimum wage, it is more feasible to address the rising cost of living and emphasise a more comprehensive and fair income distribution strategy,” he said, adding that this would include monitoring prices, increasing subsidies for essential items and implementing policies that provide financial assistance to those in greater need.

According to the National Wages Consultative Council (NWCC) Act, the standard for deciding minimum wages are base and adjustment criteria.

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Base criteria include poverty line income and median wage, while adjustment criteria include changes in consumer price index, productivity growth and real unemployment rate.

Syed Hussain said despite a positive long-term global trend in average wages, millions of workers worldwide in formal and informal economies live in poverty and continue to earn low wages compared with the cost of living.

“The workers and their families are unable to afford healthy food, decent housing, medical care or schooling for their children. So, it is the responsibility of every stakeholder to re-examine the issue of wages, its collective definition as applied in Malaysia and the challenges in implementing the evolving concept of a living wage.”

He said the review is important due to an increase of workers transiting jobs, with almost three million in the gig economy sector, although not all live in poverty as some are paid better than others.

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“The minimum wage is different from living and progressive wages. NWCC is studying what the minimum wage should be. The study is expected to be completed and discussed by NWCC by year end, after which a recommendation would be made to the government.

“A pilot study on a progressive wage for those earning below RM5,000 is being carried out by the government to analyse what subsidies could be given to close the gap in living wages. We look forward to the results of the study.”