As the Chartered Institute of Personnel and Development (CIPD) Chartered Fellow, I had the opportunity to read the World Bank Group addresses the wage-versus-productivity relationship in its report, "Raising the Ceiling, Raising the Floor: The Jobs Agenda as a Productivity Agenda for Malaysia". The report highlights “A nuanced dynamic: while longer-term national trends suggest that nominal or average aggregate salaries have grown faster than labor productivity per worker, this growth is heavily skewed by a small group of high earners and masks critical structural imbalances. Aggregate wage growth figures are heavily distorted by elite earners. Skilled workers accounted for 56.8% of the total increase in overall mean monthly wages between 2010 and 2024, despite representing only 36.5% of wage recipients. Conversely, semi-skilled workers make-up the vast majority (55.4%) of the workforce but only captured 38.1% of the total wage growth in Malaysia."
I found the report of the World Bank emphasizes that how its measure productivity changes the entire narrative: Productivity Per Worker has grown slower than real monthly wages overall since 2010. Productivity Per Hour Worked has moved broadly in line with wage growth. This indicates Malaysian workers have become more efficient on an hourly basis, but average working hours have fallen, which mathematically limits the total output volume generated per employee. While long-term trends (2010-2024) look like wages outpaced worker output, recent macroeconomic shocks paint a different picture. Cumulatively since 2019, productivity actually rose 9%, while private-sector real wages per worker declined by 1.7%, highlighting the recent wage erosion against inflation. Additionally, underemployed tertiary graduates face a massive 49.3% wage penalty, proving that a mismatch in job creation is holding back fair economic opportunity and compensation.
To break this cycle, I agree with World Bank for Madani Government moving away from blunt wage ceilings or floors and focusing on a multi-pronged Jobs & Productivity Agenda. Prime Minister & Finance Minister, through the platform of Budget 2027 must remove business obstacles by lower regulatory barriers to market entry & exit, so capital flows to highly productive innovative firms.
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Zulkifly Baharom (hajizul50@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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