Too-low wages and the ‘squeezed middle’
We have written a series of articles addressing economic issues and challenging certain prescriptions by the Malaysian government, including on targeting labour share of income and the need to end state capture. This week, we address direct wage intervention. We have done so to articulate alternative views, ahead of the upcoming Budget 2024. Over the next few weeks, we will also be writing on the proposal to reduce the board lot size for trading on Bursa Malaysia and what really drives stock prices, the necessary building blocks for “real” digital transformation and affordable housing. Given that this is a weekly column, we will no doubt not be able to publish them all before Oct 13. Therefore, some of the articles will come after the budget has been tabled.
Let us start by stating, unequivocally, that we agree overall wages in Malaysia are low and we are glad that the government is now focused on how to improve the situation, which, in truth, has persisted for far too long. It is good that the issue is being publicly discussed and debated, and we hope the exchange of ideas will lead to policies that will achieve their intended purposes. Our biggest fear is that broad stroke direct intervention policies, based on incomplete data, that treat the symptoms rather than the cause will end up costing the nation investments and jobs. Let’s be honest; policy interventions often trigger a chain of events that lead to unexpected consequences. As we said before, the road to hell is paved with good intentions.
