BANGI: The government is considering introducing a “Cost of Living Index” to act as a reference for employers when reviewing the salary of employees.
Finance Minister Lim Guan Eng said salary reviews were currently being based of the consumer price index (CPI), which he said might not accurately represent the rising cost of living in the country.
He explained that this is because CPI is more holistic, taking into account items such as cost of doing business and production costs, and does not focus solely of the cost of living.
“We can’t use CPI as our reference point for salary reviews. Because say for instance our inflation rate is 1%, we can’t just increase salaries by a mere 1%. And what if it reduces, do we also reduce salaries?
“If we can have this cost of living index, at least we can recommend employers to compare it to the CPI.
“It’s much fairer and we’ll also be able to gauge more accurately the salary needed for an individual to have a reasonable standard of living,” he said after launching BelanjawaKu: Expenditure Guide for Malaysians, here, today.
He added that the proposal is currently in the pipeline, with discussions already being held with Bank Negara Malaysia (BNM).
Lim also called on the Employees Provident Fund (EPF) to conduct a similar study (for a cost of living index).
EPF chief executive officer Tunku Alizakri Alias, when met by reporters later, commended the suggestion by Lim, saying it would help contribute further to the social security of Malaysians.
“From EPF’s perspective, I think the creation of such an index will be very good. It is a very good first step forward for us in terms of our social security and infrastructure, so I really look forward to seeing it (the index),” he said.
Tunku Alizakri added that he hoped the data collected for BelanjawanKu would be used for policy-making purposes.
BelanjawanKu is a reference budget for Malaysians that includes expenditure required by individuals and families to lead dignified lives with active involvement in society.
A survey was conducted on the household expenditure of those in the Klang Valley and the prices of goods and services prior to the compiling of the guide.
