New poverty line calls for higher minimum wage, says economist

Economist Yeah Kim Leng acknowledges that raising the minimum wage under current economic conditions would be unrealistic.

PETALING JAYA: An economist has urged the government to raise the statutory minimum wage sooner than it has planned, saying the recent revision of the poverty line income has made this necessary.

Speaking to FMT, Yeah Kim Leng of Sunway University said the new minimum wage ruling should include a requirement for increased yearly increments.

However, he acknowledged that raising the minimum wage under current economic conditions would be unrealistic.

“It is only when the unemployment rate stabilises and the job market slack is reduced that raising the minimum wage would not add to the unemployment pressure,” he said.

Yeah Kim Leng

The unemployment rate rose to 5.3% in May from 5.0% in the previous month.

Yeah said Putrajaya would need to give employers incentives and create a more competitive business environment in order to steer their companies toward investing in skills and innovation capacity.

“With higher productivity and value-added activities, they will be able to afford higher wages.”

Last week, the statistics department revised Malaysia’s poverty line income to RM2,208 a month from the previous level of RM980.

Chief statistician Mohd Uzir Mahidin said the revision was consistent with the current emphasis on optimal food intake and quality non-food basic requirements.

Philip Alston, the former United Nations rapporteur on poverty and human rights, said last year that Malaysia was using an unduly low poverty line which did not reflect the cost of living.

Yeah welcomed the new poverty line, saying the substantial increase was reflective of on-the-ground realities and the current living costs for Malaysians.

He attributed the revision to Alston’s report as well as a recent study by Bank Negara, which found that an estimated 27% of households in Kuala Lumpur were earning below the amount required for the minimum acceptable standard of living.

He also said the government might have outgrown its “excessive fixation” on reporting success in its poverty reduction programmes.

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