Economists suggest that urban Malaysians need a minimum monthly income of RM3,000 to cover their basic living expenses. This figure is proposed as a more realistic benchmark compared to the government’s official minimum wage, which some experts believe is insufficient for city dwellers.

The Rising Cost of City Living

Professor Emeritus Dr Barjoyai Bardai, a lecturer at Malaysia University of Science and Technology (MUST), has highlighted that the current RM1,700 minimum wage often compels many urban families to take on multiple jobs to make ends meet. He suggests that the determination of a minimum wage should consider geographical location and the type of job, as financial needs in cities differ significantly from those in rural areas.

“A RM1,700 salary may suit unskilled labour, such as foreign workers in factories or as security guards,” Dr Barjoyai stated. “However, local workers, especially in cities, require more.”

Understanding Differing Worker Needs

Dr Barjoyai explained the varying financial responsibilities between local and foreign workers. He noted that local urban workers typically cover expenses such as rent, utility bills, and supporting their dependants.

In contrast, foreign workers often manage their expenses differently, frequently sharing crowded living spaces with many others, eating frugally, and sending the majority of their income back to their home countries.

He also pointed out that despite the implementation of the minimum wage, many local employees in sectors like tourism, plantation, and agriculture still earn below the RM1,700 threshold. This situation places them under considerable financial pressure.

Economic Considerations and Sustainable Solutions

While a higher wage is suggested, Dr Barjoyai cautioned that a sudden increase could negatively affect micro, small, and medium enterprises (MSMEs). “Many businesses might shut down if they cannot afford to pay more,” he warned.

As a sustainable, long-term approach, he proposed focusing on workforce development. “A long-term solution would be to provide reskilling and upskilling opportunities so Malaysians can transition to higher-paying jobs,” he said.

Expert Insights on Financial Planning

Dr Mohamad Fazli Sabri, the Dean of the Faculty of Human Ecology at Universiti Putra Malaysia (UPM), offered a similar perspective. Citing the Basic Expenses for Decent Living (PAKW) benchmark, he suggested that urban residents should ideally earn between RM2,300 and RM5,000 a month. He calculated that the average minimum expenditure for a single individual in the capital could be around RM2,200 monthly, covering only essentials like rent, transport, and food, without accounting for savings or emergencies.

Dr Mohamad Fazli, who is also the Vice President for Research & Publication, discussed the popular 50:30:20 budgeting rule, where 50% of income is for needs, 30% for wants, and 20% for savings. “However, this only works when income matches the cost of living,” he explained. In reality, many cannot rely on the minimum wage alone and must seek additional income.”

He stressed the need for a review of the current wage policy and said the government must reassess the wage level to better reflect the financial realities faced by citizens and to help them achieve financial stability.

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• TAGS:
• Basic Expenses
• Budgeting Rule
• Minimum Wage
• PAKW