Santiago referred to a report in which the central bank said the minimum wage, introduced in 2013, has not proportionally raised wages for middle-income workers.

“BNM is right, minimum wage alone won’t drive meaningful income growth. Ten years ago, the central bank estimated living wages at RM2,700. In 2025, the benchmark living wage for government-linked investment companies was RM3,100.

“It’s time BNM walk the talk and mandates a living wage for all banks, including its subcontractors and informal workers,” he said in a statement.

Santiago said the issue reflected deeper structural weaknesses in the labour system, adding that political will, unionisation and policy consistency are key.

“Collective bargaining is not working for workers. That’s not a market failure. It’s an institutional one,” he added.

He said Malaysia was lagging behind global trends where wage-setting mechanisms were becoming more proactive.

“Globally, wage-setting is making a comeback, from coordinated bargaining in Europe to more proactive wage policies, beyond minimum wage. Malaysia is still relying heavily on the minimum wage alone,” he said.

Santiago also questioned long-standing justifications by firms for slow wage growth.

“For years, firms pointed to ‘cost pressures’ and ‘uncertainty’. But if wages continue to lag despite growth, the issue isn’t just firm behaviour; it’s a system that doesn’t mandate productivity gains translate into wages at the expense of workers,” he said.

In its Economic and Monetary Review 2025 released yesterday, BNM said Malaysia must strengthen wage-setting institutions to raise incomes and purchasing power more meaningfully.

The central bank said international experience shows that complementary mechanisms — such as wage guidelines, living wage standards and coordinated wage-setting — can help link wage growth to national priorities like productivity, competitiveness and price stability.