SHAH ALAM, Dec 27 — Malaysia should adopt a living wage to tackle rising living costs and promote inclusive economic growth, according to experts.

A living wage is calculated based on the real cost of living in a specific area, ensuring that workers maintain a decent standard of living.

Universiti Teknologi Mara (UiTM) Malaysian Academy of SME and Entrepreneurship Development (MASMED) coordinator Dr Mohamad Idham Md Razak said the approach ensures workers earn a decent living, eases financial stress and boosts productivity.

“The national minimum wage approach is increasingly seen as inadequate in addressing the differing living costs across locations, particularly between major cities and rural areas.

“While high costs can indicate robust economic activity, strong demand and better service standards, problems arise when these cost increases are not matched by corresponding wage growth. In such cases, high living costs reflect an imbalance with productivity,” he told Bernama when contacted.

Meanwhile, UniKL Business School economist Associate Prof Dr Aimi Zulhazmi Abdul Rashid said high living costs in Selangor and cities like Putrajaya and Penang reflect not just strong economic activity but also development imbalances and the gap between income and expenses.

He said classifying households as B40, M40, or T20 is increasingly flawed as it ignores wide variations in basic costs across locations, adding that these differences are driving more people to move to urban areas to improve their living standards.

“While comparisons of gross income between urban and rural areas are made, they only show half the picture, as they ignore significant differences in expenses.

“These differences may also explain the high migration from rural areas to major cities in search of higher incomes, but in reality, many get trapped by higher living costs and have to juggle two or three jobs at once,” he said.

Previously, the Department of Statistics Malaysia (DOSM) reported that Kuala Lumpur, Selangor, Penang, and Putrajaya had the highest living costs, according to the Basic Expenditure for a Decent Living (PAKW).

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said the 2024 PAKW Index analysis, with Kuala Lumpur at 100, revealed clear differences among states, noting that for single-person households, Selangor recorded the highest index at 92, followed by Penang at 84.2 and Putrajaya at 83.1. — Bernama