According to the Organisation for Economic Cooperation and Development (OECD), labour income share refers to the portion of the national income that goes to labour compensation.

The Labour Law Reform Coalition (LLRC) said the Madani Economy document stated that Malaysia’s labour income share dropped to 32.4% in 2022.

It said this was appalling as it represented a sharp decrease from the 35.2% recorded in 2017, according to a 2018 Bank Negara Malaysia report.

“This means that workers’ share of the economy has rolled back to the status in 2011 after the Covid-19 pandemic,” it said in a statement.

LLRC said it had warned that the low unionisation rate and lack of bargaining mechanisms at workplaces, especially amid the pandemic, could lead to unilateral wage cuts by employers.

It also attributed the decrease to the lack of a concrete roadmap on the matter.

“The ambitious 48% labour income share target stated in the Shared Prosperity Vision 2030 (SPV 2030) remains elusive, a casualty in the absence of a resolute roadmap and audacious strategy to guide the way.

“As a result, the SPV 2030 is doomed to fail,” it said.

It urged the federal government to learn from its predecessors’ past mistakes and develop a comprehensive strategy to work toward achieving a 45% labour income share over the next decade.

“Among other measures, they should have a national action plan on trade union development as a step to strengthen trade union bargaining power, which will lead to higher wages and benefits for workers in Malaysia.

“Trade unions act as the voice of the workforce, but their efficacy is strongly based on a supportive legislative framework and dedicated involvement by the government,” it said.