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Sime Darby Property Bhd's move to raise the minimum living wage for its B40 employees by 80 per cent, from RM1,500 to RM2,700 per month in 2024, could set a new benchmark for the private sector, economists say.
Economist Dr Geoffrey Williams described the initiative as a positive step, even if it falls short of the RM3,100 monthly living wage recommended by Bank Negara Malaysia and government-linked investment companies (GLICs).
On May 1, Khazanah Nasional Bhd, Permodalan Nasional Bhd (PNB), the Employees Provident Fund (EPF), Kumpulan Wang Persaraan (KWAP), Lembaga Tabung Angkatan Tentera and Lembaga Tabung Haji announced a RM3,100 living wage policy for all their permanent Malaysian employees.
The policy is part of the Finance Ministry's GEAR-uP initiative, which aims to align GLIC efforts to boost growth in key sectors.
"The six GLICs have committed to the RM3,100 living wage in line with the Belanjawanku and Bank Negara estimates. So the RM2,700 is a little below that but still a good threshold," Williams told Business Times.
Williams added that the decision reflects the ability of large companies, particularly government-linked companies and GLICs, to increase base pay for lower-income workers.
"This is a good move that will clearly help their lower-paid staff. However, they should disclose how many people will benefit," he said.
As of Feb 1, the national minimum wage in Malaysia stands at RM1,700 for all employees in businesses with five or more staff, as well as those under the MASCO (Malaysia SME and Small to Medium Enterprises) sector. Employers with fewer than five workers have until Aug 1 to comply.
Putra Business School economic analyst Prof Dr Ahmed Razman Abdul Latiff praised the move by Sime Darby Property, noting that the RM2,700 wage is close to the national median income level.
Razman said this has wider implications than just simply providing better financial support, as higher wages mean the workers will have a higher contribution to their Employees Provident Fund (EPF) account, which subsequently will help them to have a higher quality of life after retirement.
"This decision should be emulated by other large corporations, especially for those hiring many workers who live in urban areas.
"It will also reduce the salary inequality between top bosses and their workers, where the gap is currently increasing," he told the Business Times.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the decision could set a new benchmark and attract talent in a competitive labour market.
Citing the trend in the labour markets, Afzanizam said the own-account workers (OAW) have been growing quite persistently at 2.9 per cent per annum between 2019 and 2024 to 3.1 million.
"With youth increasingly turning to gig work and self-employment, substantial wage increases can help address labour shortages, though benefits like flexible hours and career development are also key," he said.
Afzanizam added that while RM2,700 is a good start, the adequacy of income depends on location and family size.
Citing EPF's Belanjawanku guide, he noted that a single person in the Klang Valley typically needs RM2,800 monthly, while a family with one child may need over RM6,400.
"Hence, we need to understand that salaries should reflect the skillset and qualification but at the same time, real income, which will consider the cost of living, also matters. This may require different policies and approaches in order to ensure that the cost of living will remain manageable," he said.
Meanwhile, Sime Darby Property chairman Datuk Rizal Rickman Ramli said the wage adjustment took into account the increased cost of living and aimed to provide better financial support for lower-income employees.
"This initiative highlights our commitment to financial stability and the well-being of our workforce, particularly those most impacted by rising living costs," he said in the group's integrated annual report 2024.
As of March 28, Sime Darby Property's major shareholders included PNB's unit Amanah Saham Bumiputera with a 36.73 per cent stake, EPF with 11.08 per cent, KWAP with 6.25 per cent and PNB with 5.23 per cent.
