According to the report titled “Low-Skilled Foreign Workers Distortions to the Economy”, foreigners in managerial positions are paid almost double what a local in the same position gets.
The report also found that 25% of heads of households with tertiary education are still earning below the “living wage” in Kuala Lumpur.
However, the crux of the labour issue in Malaysia is that wages have been distorted by the ready availability of cheaper low-skilled foreign workers. This, the report said, has discouraged industrial upgrading.
The Edge quoted the study as saying that wages for mid-skilled occupations are too low to attract local workers and that employers are reluctant to increase wages because of the presence of foreign workers.
“It makes labour relatively cheap when compared to capital, and thus weakens incentives for firms to substitute labour for technology or for greater value-adding activities from the employment of higher-skilled labour,” the report said.
According to the report, the median wages of mid-skilled occupations are generally lower for foreign workers than for locals, and it is in the mid-skilled occupations that 60.5% of local workers are employed.
The average income for foreign workers in mid-skilled occupations ranges from RM1,006 to RM1,440 while a local commands RM1,530 to RM1,750.
“So long as blue-collar wages continue to face downward pressure, employers will not be hard-pressed to adopt productivity enhancing measures. Consequently, Malaysia risks being trapped in a low-wage, low-skill conundrum,” the report said.
Another BNM report said the average household size in Malaysia was about four people in 2016, while a third of households in Kuala Lumpur are earning below the living wage despite the median income in the city being RM9,073.
A living wage means a wage that allows a person to not only meet the basic necessities of food, shelter and clothing but to also be able to participate in society while having financial security.
The “The Living Wage: Beyond Making Ends Meet” report suggests the living wages for households in Kuala Lumpur should be RM2,700 for a single adult and RM6,500 for a family of four.
According to the report, those in Kuala Lumpur earning below the living wage are mostly secondary school leavers with low- to mid-skilled jobs. High-skilled workers are earning above the living wages estimate. For instance, in 2016 the median salary for managers was RM5,500 while that for professionals was RM4,450, The Edge reported.
“These findings underscore the importance of creating a high-skilled workforce in Malaysia that is equipped with the necessary competencies for higher paying jobs,” the BNM report said.
Another finding is that those earning RM3,000 to RM5,000 are the biggest borrowers and have high household debts. Many of them are under 40 years old.