Malaysia ‘addicted' to low wages, says Shahril
Shahril Hamdan said during his time in the PMO, he received pushback when proposing to reduce the ratio between CEO salaries and the median wage of companies, beginning with GLCs.
PETALING JAYA : The economy needs a major reset as Malaysia's low wage-to-GDP ratio, or labour income share, means the country is too reliant on low wages, says former Umno leader Shahril Hamdan.
In the most recent episode of #KenaSoal on the Keluar Sekejap podcast, he said the nation's economic structure prioritises or 'seems addicted' to low wages.
'Like it or not, when we talk about Malaysia's competitiveness and attractiveness for foreign direct investment, we say the unit cost of labour is low.
'Which is true, but I also feel slightly guilty about this,' he said.
Shahril, who was formerly also an economic director in the Prime Minister's Office (PMO) under former prime minister Ismail Sabri Yaakob, was discussing Malaysian wage inequality with fellow host and former minister Khairy Jamaluddin.
Earlier, Khairy said Malaysia's low labour income share, last recorded to be 32.4% in 2022 according to the statistics department, pales in comparison to Korea and Japan, where it ranges from 50% to 70%.
'This means employers and companies (abroad) pay more than they keep in the form of shareholder dividends or profits.
'The ratio of salaries between CEOs and normal employees is not as big as it is in Malaysia. Our CEOs' salaries are too big compared with the average worker in a company.
'Our capitalism prioritises shareholder profits and CEO salaries over wages for the average worker,' he said.
Shahril agreed, saying that during his time in the PMO, he had proposed that a threshold be set for the ratio between CEO salaries and the median wage in Malaysian companies, beginning with GLCs.
He said he tried to have such a threshold made mandatory but received pushback.
'Among the ways I suggested mandating a reduction in this ratio was a carrot-and-stick approach.
'So if a private company can prove that the ratio between a CEO's salary and your company's median wage does not exceed a certain threshold, we can possibly cut X per cent of your tax rate, or provide a tax rebate in some way.
'Conversely, we could penalise you with a higher tax rate if your ratio was too high. That idea didn't go anywhere,' he said.
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