KUALA LUMPUR, Dec 23 ― A PKR-linked think-tank criticised minister Datuk Seri Abdul Wahid Omar today for allegedly abandoning Putrajaya’s original plan to increase the share of workers’ wages in the national economy by 2020, pointing out the ratio has been stagnant since 1971.

According to Institut Rakyat (IR), the minister in charge of economic planning had over the weekend contradicted the Finance Ministry’s target to increase “wage share” from 34 per cent of gross domestic product (GDP) this year to 40 per cent by 2020, even though the ratio has not moved since 1971.

In his remarks to The Edge Weekly, Abdul Wahid reportedly said, “We never intended to achieve it by 2020.”

In a statement, IR executive director Yin Shao Loong argued that workers’ wage share has more or less stagnated for decades, having decreased a little at times, before eventually easing back to levels comparable to 1971.

“Meanwhile taxes have shrunk dramatically, and the share of the economy retained by the private sector has grown,” the group’s executive director Yin Shao Loong said in a statement.

In comparison, Yin said that in South Korea, its share of GDP paid out as wages is around 63 per cent now, although both Malaysia and South Korea were at similar economic levels in 1950.

“Even Thailand pays out a similar share of GDP to its workers. Malaysia’s wage share is very low by international standards,” Yin said, relating a similar remark by Nobel Prize-winning economist Joseph Stiglitz when met earlier this year.

The wage share is a way to track how national economic wealth is shared between workers, employers, and taxes.

Abandoning the plan would be bad news for Malaysian workers’ hopes for higher wages, a greater share in the economic pie, and more inclusive growth, IR said.

When tabling Budget 2015 earlier this year, Prime Minister and Finance Minister Datuk Seri Najib Razak had mentioned Putrajaya’s target to achieve 40 per cent wage share by 2020.

“Is Wahid saying that the Finance Minister knowingly misled Parliament and the Malaysian people about this target?” asked Yin.

“Or is this an attempt to backpedal from the earlier commitment following the plunge in global oil prices, the sharp drop in Bank Negara’s foreign reserves (which declined by RM8 billion in October alone), and growing fears of a repeat of the 1998 financial crisis?”

Although wage share is stagnant, the ruling coalition will instead start to impose the goods and services tax (GST), while employers control the lion’s share of GDP at 64.2 per cent and getting “an easier ride” from Putrajaya, he said.

“Pakatan Rakyat in its shadow Budget proposed a target of 50 per cent wage share by 2020, to be achieved in part through fairer wage bargaining between employers and workers, provided the government acts as an honest broker,” he suggested.

In data provided by the Department of Statistics, workers held a 33.6 per cent share of the GDP last year, while employers hold 64.2 per cent, and a mere 2.2 per cent was made up by taxes.

In comparison, workers held a wage share of 33.8 per cent of the GDP back in 1971, while employers hold 51.7 per cent, and taxes 14.5 per cent.