Cheap labour, costly future

MALAYSIA’S minimum wage is back in focus. Malaysia’s economic numbers may be improving, but for many households, prosperity remains something they see in headlines rather than experience at home.

Nearly two-thirds of Malaysian wage earners are in semi- or low-skilled occupations, with median wages of just RM2,223 and RM1,758, respectively.

The Khazanah Research Institute has also found that around 70% of Malaysians do not feel the prosperity reflected in the country’s headline economic indicators.

That disconnect matters.

Gross domestic product can grow, national income can rise and foreign investment can surge. But if wages fail to keep pace with the cost of living, households may still feel financially insecure.

An economy can be growing while families struggle to feel that their own circumstances improving.

This is why Budget 2027, to be tabled on Oct 9, needs to look beyond one-off cash assistance. Financial aid can provide immediate relief, but it cannot solve a structural affordability problem.

Malaysia needs sustained real wage growth, stronger social protection and greater attention to household costs.

But every discussion about raising wages inevitably brings another familiar argument: businesses cannot afford it.

Lobby groups warn that higher minimum wages will put pressure on employers, increase costs and threaten jobs.

Those concerns deserve consideration. But there is another question we should be asking: how long can Malaysian businesses continue to compete by keeping labour cheap?

For years, too many businesses have had access to relatively inexpensive labour, reducing the incentive to invest sufficiently in productivity, technology and automation.

Higher wages should not simply be viewed as a cost imposed on businesses; hey can also signal that the old low-cost model is no longer sustainable.

That question becomes even more urgent as artificial intelligence (AI) and automation rapidly reshape the workplace.

If machines and AI can increasingly perform routine and repetitive tasks, Malaysia should be asking why businesses still rely so heavily on low-paid human labour – and whether greater investment in technology could allow workers to move into higher-value, better-paid jobs.

There is also a political lesson here. We often explain voting behaviour through race and religion.

Those identities matter, but so does the household economy. Voters ask: Can I afford groceries? Can I pay my bills? Can I save? Can I give my children a decent life?

These everyday experiences shape confidence in government.

The challenge for Budget 2027 is therefore bigger than another assistance programme.

It is about closing the gap between economic growth and household prosperity – while pushing businesses towards a more productive, technology-driven economy.

Malaysia cannot build a high-income nation on low-income households, nor can it rely indefinitely on cheap labour.