“It is a red herring. Sometimes GST has less to do with it,” he said when asked on the general perception that the higher cost of living was due to the implementation of the broad consumption tax.

“People’s income must go up. We need to improve their productivity, their level of education and skills.

“We need our industries to go up the value chain so that they can create good-paying jobs,” he said in a briefing with senior editors on Tuesday ahead of the release of BNM Annual Report 2017 and Financial Stability and Payment Systems Report here today.

He said people’s problems could not be viewed from just one perspective.

“Because, if their income is not as much as it should be, then it causes other problems.

“The affordable housing issue is due to low income. Not enough income to catch up with galloping house prices,” he explained.

“If we are really to become wealthy, the types of jobs we generate must be of quality.

“We cannot generate jobs that attract only foreign workers,” he added.

‘Wages in labour market low’

Muhammad expanded on his points at a media briefing held here today.

He said as Malaysia develops to become a high-income nation, it was time for the citizens to aspire to attain an acceptable living wage level.

He said the wages in the labour market were low with half of the workforce earning about RM1,700 a month.

The average starting salary for a diploma holder was only about RM350 above the minimum wage of RM1,200.

“Since 2014, the incomes of the bottom 40% (B40) of households expanded by 5.8% on an annual basis, equivalent to RM156 per month.

“However, expenditures grew at a faster pace of 6%, or RM120 per month, which leaves the B40 with little money to spend.”

Muhammad said living wages in Kuala Lumpur in 2016 were estimated at RM2,700 for an adult, RM4,500 for couples without children and RM6,500 for couples with two children.

“This is just a guideline used by many advanced economies to give an idea of what type of wages is considered decent.

“In Malaysia, the highest cost of living is actually here (KL) and, to a certain extent, the suggested minimum wage could also be applied in Penang and Johor Bahru,” he said.

“If you are a single person living in Muar, and you earn RM2,700, you will live very comfortably because the rental rates and the cost of living are low.”

He said such living standards went beyond having basic necessities, as it included meaningful participation in society, personal and family development and freedom from severe financial stress.

The provision of living wage should also commensurate with productivity, and could be a step towards a higher quality of life in Malaysia.

He said the living wage could serve as a guide to the income level needed to achieve a minimum acceptable living standard.

Muhammad said about 27% of KL households earned below the minimum living wage, and they were mostly secondary school-leavers with low-skilled to middle-skilled jobs.

In contrast, those who earned above the minimum living wage were mostly tertiary graduates with high-skilled jobs, he said.

He said the findings also underscored the importance of creating a workforce equipped with the ability to attain higher skilled and thus higher-paying jobs, leading to higher living standards.

“There are two aspects to be considered — cost of living and improvement in income — and this is why the government has embarked on various strategies that could create high-paying jobs,” he said.

Muhammad said BNM planned to set up the Malaysia Bureau of Labour Statistics next year, which would enable the government to keep tabs on job creations and monthly salaries.

http://www.freemalaysiatoday.com/category/nation/2018/03/28/bosses-group-pans-proposal-for-higher-minimum-wages/

http://www.freemalaysiatoday.com/category/nation/2018/03/22/zahid-proposes-rm3500-minimum-wage-rate/

http://www.freemalaysiatoday.com/category/nation/2018/03/12/govt-mulls-raising-minimum-wages/