“It looks like we need the next Prime Minister in waiting to oversee the labor market reform.”
Prime Minister Anwar Ibrahim stated that the fifth MADANI budget proposal was carefully crafted with consideration for public feedback.
He said so a day after the announcement in Parliament on Friday. He added that it was a long process in which many have expressed their opinions, criticisms, and suggestions. The Ministry of Finance (MOF) team worked through the night to finalize the proposal.
Among the widely publicized announcements is the scheduled increase in the minimum wage to RM2,000 per month and the introduction of a minimum monthly salary of RM2,500 for graduates and semi-skilled workers. The moves is expected to benefit over 4.2 million workers.
I should congratulate the MOF's team for their tireless efforts. It was a formidable challenge to accomplish public expectations within a constrained budget. However, if there is one thing that really upset me about, it is labor reform the current ruling party failed to implement.
Like other ruling parties, such announcements to increase household income may seem compassionate. Although Anwar characterized these measures as reforms to the national wage structure, the term appears questionable.
By calling himself as a sociologist, Anwar should have recognized the inherent tension between labor and management—specifically, the debate over whether productivity or high wages should come first. This sharp tug-of-war requires substantive reform.
First, Anwar should be aware of the nation’s elevated underemployment rate that is arguably more critical than the national wage levels. It appears that he may not be receiving adequate counsel regarding the phenomenon.
Approximately one-third (27.4% to 37.4%) of Malaysian graduates are currently underemployed. In 2024, 1.7 million graduates are affected by skill-related underemployment, with nearly 60% of this cohort comprising individuals under the age of 24.
So what is skill-related underemployment? It describes a condition in which highly educated individuals are employed in roles that do not utilize their skills or academic qualifications. The annual supply of 250,000 new graduates exceeds the 40,000 high-skill positions generated each year.
So, 210,000 recent graduates might end up working in semi-skilled roles rather than professional positions. Over time, the figure is projected to rise significantly, with minimal concern from the policy maker. Millions of them are waiting to be placed in professional position.
Anwar should be advised that this demographic values more on career progression and job security over the RM2,500 minimum monthly salary benchmark. Raising the minimum wage may trigger inflation, but reducing skill-related underemployment can help offset it.
Consider civil servants, for example: thousands possess qualifications for professional roles yet remain confined to low-productivity positions for years.
Ramanan noted that the Madani Government recognizes the prevalence of graduates employed outside their areas of expertise.
But why did Prime Minister Anwar Ibrahim not leverage this structural mechanism particularly within the public sector—in Budget 2027? It looks like we need the next Prime Minister in waiting to oversee the labor market reform.
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Amir Al Fateh (malaydigest@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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