Income levels in Malaysia remains a highly contentious subject, as workers face significant pressures due to the rising cost of living, while firms continue to contend that the level of incomes remained appropriate and reflective of productivity, a BNM report found. — Picture by Yusof Mat Isa

KUALA LUMPUR, March 27 — Income levels in Malaysia remains a highly contentious subject, as workers face significant pressures due to the rising cost of living, while firms continue to contend that the level of incomes remained appropriate and reflective of productivity.

An article titled “Are Malaysian Workers Paid Fairly?: An Assessment of Productivity and Equity” in the Bank Negara Malaysia (BNM) 2018 Annual Report released today said Malaysian workers receive lower compensations relative to their contribution to the national income from productivity and equity perspectives.

“Firstly, Malaysians are paid a lower wage compared to benchmark countries, even after taking into account productivity differences, and Malaysia had a lower labour share of income despite its labour-intensive nature.

“This suggests workers are not adequately compensated for their contributions,” it added.

The article also questioned the reason for the fact that the share of compensation accrued to employers instead of employees was higher relative to the country’s aspirational peers, and how Malaysia’s taxation and distributive policies can positively impact and enhance the division of incomes.

“These are hard questions that require judicious deliberation and committed action.

“In totality, while these policy challenges seem daunting, the responsibility of advocating for a more equitable distribution of incomes among all economic agents remains,” it said.

The article also said that over the past decades, the nation had successfully navigated its passage from a factor-driven to an efficiency-driven economy.

“In the country’s next evolutionary step towards an innovation-driven economy, it is important to ensure that the welfare of the labour force is well preserved, if not enhanced.

“This will ensure that workers continue to be properly incentivised to raise their productivity, thus achieving greater value creation in the economy,” it added. — Bernama