Home TA Online Revised 2023 Budget fails to tackle low wages and rising living costs

Revised 2023 Budget fails to tackle low wages and rising living costs

It should have addressed head-on the need for structural changes to the low and middle-income wage conditions

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Whilst the revised 2023 Budget seems to address a diverse set of challenges, the “unity government” has failed to tackle the eroding purchasing power of wages sparked by rising cost-of-living factors.

There is conclusive evidence to show that workers in Malaysia are paid a pittance: a central bank Bank Negara study has benchmarked RM2,700 as a living wage for an individual.

So there is a compelling need to rectify the mismatch between the existing minimum wage of RM1,500 and the living wage put forward in the 2018 Bank Negara study. This, regrettably, was not considered in the Budget.

Granted, the government is confronted with multiple challenges. But it has a moral obligation to tackle the existing grossly inadequate minimum wage.

The government ought to have recognised that our workers, including those in the lower range of the middle 40% of society, now have to eke out a living on unsustainable rates of pay. It ought to have had the courage to migrate, at least progressively, to a living wage model, as expounded in the 2018 Bank Negara study.

A 2% reduction in taxable income for the middle 40% of society is a one-off saving, which cannot ease the financial constraints workers face daily.

A more effective approach would have been to enhance wages progressively.

During the various movement control orders imposed by the previous administrations, wages were reduced or frozen. This translated to lower disposal incomes and reduced contributions to the workers’ Employees Provident Fund retirement savings.

The government should have first, enhanced wages, which would result in higher monthly EPF contributions and, second, increased the EPF monthly contribution rates.

READ MORE:  Will the new wage model work for workers?

A one-off award of RM500 to a selected group of EPF contributors will not address the fundamental issue of depleted EPF savings caused, primarily, by an ill-conceived scheme of EPF withdrawals, which was allowed by those who previously helmed the government.

From a worker’s perspective, the revised 2023 Budget has failed to tackle head-on the need for structural changes to the low and middle-income wage conditions confronting the working masses.

In this, I completely agree with the outcry by Cuepacs, the umbrella trade union organisation representing civil servants, that the revised 2023 Budget has failed to tackle unsustainable wages in the civil service.

With an unprecedented uptick in inflationary indices, the least the government could have done was to announce a commitment to review the civil service terms of employment. Sadly, such an undertaking was not even considered in the Budget!

All said, the government has sidelined the core challenges faced by the millions of workers both in the private sector and in the civil service. It has failed to tackle basic issues such as the constantly rising cost of living, stagnating or declining disposal incomes, and depleting EPF savings.

The Budget has thus missed the forest for the trees in tackling the economic challenges confronting the working class.

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

AGENDA RAKYAT - Lima perkara utama
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K Veeriah, a longtime Aliran contributor, has been a trade union industrial relations officer, involved mainly in collective bargaining and handling trade disputes, since 1978. He has also served as secretary of the Penang division of the Malaysian Trades Union Congress since 1991, after stints on the MTUC's national executive committee and general council
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Paul Lim
Paul Lim
5 Mar 2023 5.51am

Malaysia has to get out of this ideology of cheap labour meaning low wages to attract foreign invesments. It is rather the local domestic companies that demand low wages. If Malaysia continues on this path, it will not go up the value chain and it will dégrade behind other economies in the région.

Phua Kai Lit
Phua Kai Lit
28 Feb 2023 3.45pm

In the case of inflation, need to look at both the supply side and the demand side, cost-push versus demand-pull inflation. Look at the different aspects of spending on essential things that hit low income people the hardest and how to deal with rising prices in these areas e.g. basic foods commonly consumed by low income people, housing rentals, costs of essential medical drugs they have to pay out-of-pocket, costs of transport for their school-going children etc. Rent-seeking cartels that raise prices (e.g. for food) in these areas need to be broken up, for a start. Malaysians pay high prices for essential drugs and the govt can intervene and do something about this, e.g. negotiate prices with pharmaceutical companies as in Netherlands.

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