Khazanah Research Institute (KRI) said the growth of real wages, accounting for inflation, for employees aged between 20 and 29 was much slower than for other age groups.

KRI said the average growth of wages per year for this age group was 2% to 3% as opposed to the national average of 3.6% a year.

It said wages had been increasingly bunched at a low level around the RM1,001 to RM2,000 category.

“Employment growth in the last decade tends to concentrate on economic activities with lower wages,” it said.

KRI added that Malaysians were concentrated in domestic services that typically do not offer high wages.

It said the structural mismatch in the labour market of skill-related underemployment (SRU) had also been rising.

“Defined as tertiary-educated persons who are working in semi-skilled and low-skilled jobs that do not require tertiary education, the share of SRU increased from 8.2% of total employment in the first quarter of 2017 to 12.4% in the last quarter of 2020,” it said.

KRI said that if workers cannot move out from these jobs that require less skills than their qualifications, they would continue to receive low wages.

It added that the strengthening of wage policies was essential to ensure the well-being of all workers.

“Minimum wage was only introduced in 2013 and we have a long way to go to ensure that all workers are paid at least this minimum rate.”

KRI said that while the minimum wage was meant to protect the most vulnerable and low-paid workers, the average and median wages must be pushed higher.

“Linking productivity to income is one of the ways to boost wages, but low take-up rates of the productivity-linked wages system by employers warrants more scrutiny.

“Decent work with equitable pay and inclusion in social protection schemes, among others, has to be the priority of the various growth-enhancing initiatives introduced by the government.”