Charles Santiago
Bank Negara is right: the minimum wage alone won’t drive meaningful income growth.
A decade ago, the central bank estimated the living wage at RM2,700.
In 2025, the benchmark living wage for government-linked investment companies was RM3,100.
It is time Bank Negara walked the talk and mandated a living wage for all banks, including their subcontractors and informal workers.
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Political will, unionisation and policy consistency are key here. The central bank is pointing to a deeper issue: productivity gains are not translating into higher wages for workers. Collective bargaining is not working for workers.
That is not a market failure but an institutional one.
Globally, the tide is turning
Globally, wage-setting is making a comeback – from coordinated bargaining in Europe to more proactive wage policies that go beyond the minimum wage. Malaysia is still relying heavily on the minimum wage alone.
For years, firms have pointed to “cost pressures” and “uncertainty”. But if wages continue to lag despite growth, the issue is not just firm behaviour. The issue is a system that does not mandate productivity gains to translate into wages, leaving workers to bear the cost**.
Bank Negara also highlights the “second demographic dividend” – the idea that higher wages lead to higher savings and, in turn, stronger long-term growth.
So should the government mandate higher wages to realise this potential?
Charles Santiago is a former MP for Klang.
AGENDA RAKYAT - Lima perkara utama
- Tegakkan maruah serta kualiti kehidupan rakyat
- Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
- Raikan kerencaman dan keterangkuman
- Selamatkan demokrasi dan angkatkan keluhuran undang-undang
- Lawan rasuah dan kronisme
