Bank Negara Malaysia today issued a statement clarifying the issue of “living wage”. The Central Bank said it was incorrect to say that Bank Negara Malaysia’s analysis on the living wage suggests that Malaysians are poor. “Living wage is a benchmark on the income needed to attain a minimum acceptable living standard. It is not a benchmark to assess the extent of poverty. In addition to meeting basic needs, the living wage also provides for a meaningful participation in society, the opportunity for personal and family development, and freedom from severe financial stress.” The Bank added that the living wage mainly serves as a guide for employers to consider paying employees according to the needs of a minimum acceptable living standard. The living wage does not supersede the relevance of the current minimum wage of RM920 – RM1,000. The minimum wage is legally binding and aims to address the basic needs of households. The ability to pay a living wage should be assessed with due consideration to employees’ productivity, so that it does not translate into unwarranted increase in cost that might lead to higher inflation.
The media statement was issued in response to an article in Sinar Harian entitled “Cepat laksana gaji cukup hidup” (Expedite the Implementation of Living Wage” which was published on 4 April 2018. Bank Negara said it was important to understand the concept fully so that any comments on the issue will not mislead and cause confusion.