RM3,100 living wage reasonable amid rising costs, say economists

Economists in Malaysia argue that a minimum wage of RM3,100 per month is reasonable given the increasing cost of living. Dr Mohamad Idham Md Razak, a senior lecturer at Universiti Teknologi MARA, stated that this figure serves as a baseline to ensure full-time workers can maintain a decent standard of living. Although overall inflation in Malaysia has decreased since the pandemic, certain goods and services remain expensive, particularly in urban areas.

Idham emphasized that the RM3,100 benchmark should not be viewed as a fixed figure, but rather as a starting point influenced by factors such as worker productivity, skills investment, and sustainable economic growth. He suggested that a balanced approach could help reduce income inequality, increase purchasing power, and stimulate domestic demand without compromising the country's economic competitiveness.

A recent report by the Government Economic Advisory Research Unit (GEAR-uP) revealed that over 90% of permanent employees in government-linked investment companies (GLICs) and government-linked companies (GLCs) earn at least RM3,100 per month. Of the 206,987 employees in this ecosystem, 189,817, or 91.7%, earn RM3,100 or more as of December 2025.

The RM3,100 benchmark is reviewed annually based on changes in the cost of living, determined by the Employees Provident Fund (EPF). Idham believes that if wages are reviewed annually, increases should at least match or exceed annual inflation, which is estimated at between three and five percent depending on economic performance and productivity. This ensures workers' real incomes are not eroded by rising living costs.

Economist Dr Aimi Zulhazmi Abdul Rashid from UniKL Business School noted that RM3,100 is not an extravagant amount, but rather a basic calculation for rent, food, transportation, children's expenses, and modest savings in major cities like Kuala Lumpur, Selangor, and Penang. With food prices and rents increasing by three to four percent annually, the purchasing power of RM3,100 today is roughly equivalent to RM2,500 in 2020.

Zulhazmi proposed a formula for annual wage reviews that combines inflation and productivity growth. If inflation is three percent and productivity increases by two percent, an annual wage adjustment of about four to five percent would be reasonable. For a RM3,100 wage, this could translate into an annual increase of RM120 to RM150. Without such automatic adjustments, wages would erode due to inflation every year.