The central bank defines living wage as the level of income needed for a household to afford a minimum acceptable standard of living.

BNM governor Muhammad Ibrahim said people should be paid so they could live comfortably.

The central bank estimates that the living wage in Kuala Lumpur for a single adult is RM2,700, a couple without child RM4,500 and couple with two children RM6,500.

“But it doesn’t mean that everyone should be paid according to these numbers. It’s a number that equates the living standards in Kuala Lumpur,” The Edge Markets quoted him as saying in conjunction with the release of the bank’s 2017 annual report.

“The minimum wage is still relevant. But what we are trying to advocate here is that when we pay people, we pay people decently. And for Kuala Lumpur, this is the decent rate. It’s more of a guideline for employers.”

It is estimated that more than a quarter of households in Kuala Lumpur are earning below the living wage.

In a study titled “The living wage: Beyond making ends meet”, BNM said the wage growth in the bottom 40% of households by income (B40) is just enough to keep pace with the rise in the cost of living.

BNM’s annual report said although the B40 group’s small increase in average monthly income over the last few years might be sufficient to keep up with inflation, it falls short of achieving a minimum acceptable standard of living.

The study said a living wage could only be effective if it was set at a realistic and sustainable level, adding that a higher wage should be commensurate with higher productivity.

It warned that persistently weak productivity growth risked lower wage growth, which could hamper the ability of households to have a minimum acceptable living standard.