Living wage should reflect cost of living: Economist

PETALING JAYA: Economists said the living wage for Malaysians should be adjusted to overcome the ever-increasing inflation and cost of living.

They are of the view that the average living wage for a Malaysian should be in the region of RM2,500 to RM2,900 a month.

Sunway University’s Prof Dr Yeah Kim Leng said adjustments to the living wage are needed as the cost of living has gone up.

He said inflation in the country is about 2.9%, but the Consumer Price Index (CPI) is not reflective of the actual cost of living.

“The CPI basket is based on price-controlled items but the Ukraine-Russia war has led to an increase in prices of other goods that are not in the CPI.

“For example, lower quality rice is under price control but the premium quality has seen a huge price increase.

“Other items such as vegetables have also seen big increases. Therefore, inflation does not reflect the cost of living of an average person.”

He added that the cost will continue to go up because of supply chain bottlenecks, imported inflation and ever-increasing prices of goods.

Yeah noted that a lot of people are forced to eat out, and this can be gauged from the price of a meal, which has gone up 30% to 50%.

He said because of this, the perception of the public is that inflation is higher than the official one.

“Living wage for each individual or family will defer because of the spending pattern according to their lifestyle.

“A decent wage needs to reflect the average living wage of a person. This must include the ability to be comfortable and to travel once a year.”

Yeah pointed out that as wages go up, businesses will tend to pass the rising costs on to the consumers via higher prices.

He said this is the wage-price spiral which will occur when salaries are increased, as some businesses will take advantage of the situation.

Yeah urged the government to monitor profiteering elements, such as unjustifiable price increases.

Universiti Utara Malaysia Professor of Resource and Environmental Economics, K. Kuperan Viswanathan, said a living wage must be in the region of RM2,500, otherwise, people would suffer.

He said the living wage should allow a person to have a roof over his head, food, transport and affordable health services.

Viswanathan said Malaysians do get some respite because the price of essential items is controlled by the government.

“Many key items may be under price control, but it does not reflect the actual inflation because some daily used items are not in the basket.”

He said inflation should stand at about 10% to 20%, not the 2% to 3%-plus stated by the government.