Malaysia should move towards adopting a living wage system to better address rising living costs and ensure more inclusive economic growth, economists and policy experts say.
A living wage is calculated based on the actual cost of living in a specific location, enabling workers to afford a reasonable standard of living rather than merely meeting a national minimum threshold.
Universiti Teknologi Mara (UiTM) Malaysian Academy of SME and Entrepreneurship Development coordinator Dr Mohamad Idham Md Razak said such an approach would help ease financial stress, improve workers’ wellbeing and raise productivity.
He noted that the current national minimum wage is increasingly insufficient, as it fails to account for wide disparities in living costs between urban centres and rural areas.
“High living costs can reflect strong economic activity, robust demand and better services. However, problems arise when wage growth does not keep pace with rising expenses, creating an imbalance between productivity and income,” he said.
UniKL Business School economist Associate Prof Dr Aimi Zulhazmi Abdul Rashid echoed the view, saying elevated living costs in Selangor and cities such as Putrajaya and Penang are driven not only by economic vibrancy but also by development imbalances and widening gaps between income and expenditure.
He added that the common classification of households into B40, M40 and T20 groups is becoming less relevant, as it does not reflect significant differences in basic living costs across regions.
“Comparisons based on gross income alone present an incomplete picture because they ignore the variation in expenses between locations,” he said.
According to Aimi, these disparities are also contributing to rural-to-urban migration, as people seek higher wages in cities, only to find themselves struggling with higher costs and working multiple jobs to make ends meet.
Previously, the Department of Statistics Malaysia reported that Kuala Lumpur, Selangor, Penang and Putrajaya recorded the highest living costs under the Basic Expenditure for a Decent Living (PAKW) framework.
Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said the 2024 PAKW Index, which uses Kuala Lumpur as the baseline at 100, highlighted clear differences among states. For single-person households, Selangor registered the highest index at 92, followed by Penang at 84.2 and Putrajaya at 83.1.
