KUALA LUMPUR, July 28 — Bank Negara Malaysia (BNM) sees the country’s wage growth has lagged productivity growth and believes there is a need to review its wage-setting system, particularly how adjustments to the minimum wage translate into wages at higher levels.

BNM deputy governor Datuk Marzunisham Omar said statistically, Malaysia still does not have sufficient high-skilled jobs.

“If you look at it, our (high-skilled) underemployment rate is still high, about 35-36 per cent. Meaning  that 35-36 per cent of our workers are working in jobs that require less qualifications than what they already have at the moment,” he said at a plenary session titled “The Future of Investment: Competing in A Fragmented World’ at the two-day BNM’s Sasana Symposium 2026 (SS2026) here today.

He opined that Malaysia needs to create more high-skilled jobs through investments while continually improving the quality of its labour force through Technical and Vocational Education and Training (TVET), Science, Technology, Engineering and Mathematics (STEM) education, as well as reskilling and upskilling initiatives.

Meanwhile, Marzunisham said BNM believes there is a need to look at the country’s wage-setting system, particularly how adjustments to the minimum wage translate into wages at higher levels.

He said initiatives such as living wage, progressive wage, wage linked to productivity are among the measures that are being put in place to help address the issue.

“When the minimum wage is implemented, it does not cascade into the higher income brackets. Instead, we see a wage compression, where the starting salaries of qualified professionals remain close to the minimum wage.

“At the end of the day, I think, what really matters is for our rakyat to have good quality life, good jobs with reasonable and high level of income. And that is what I think our policy should strive for,” he said.

Concurring with Marzunisham, Malaysian Investment Development Authority (MIDA) chairman Tengku Datuk Seri Zafrul Abdul Aziz admitted that Malaysia faces a wage issue, and emphasised that wages should rise in tandem with productivity and the country’s growth in wealth.

He said while Malaysia has enjoyed low inflation and unemployment rate, many people do not feel the benefits of economic growth, questioning why their wages have not increased despite Malaysia’s advance gross domestic product (GDP) estimates showing the economy expanded 5.8 per cent in the second quarter of 2026.

Tengku Zafrul commended government-linked investment companies (GLICs) and government-linked companies (GLCs) for initiatives such as the living wage, saying more companies should adopt similar measures despite the challenges involved.

He acknowledged that raising the minimum wage to RM1,700 was not easy, particularly among small and medium enterprises (SMEs) due to productivity concerns, stressing that improving productivity remained key to ensuring economic growth translated into higher wages.

“This is where we need to focus on the fundamentals so that, at the end of the day, this can translate into wages,” he said.

In another development, Tengku Zafrul said about 90 per cent of approved investments between 2020 and the first quarter of 2026 had been implemented, reflecting Malaysia’s strong execution capability from investment approvals to project implementation.

He said investors were generally satisfied with the government’s coordination, including with local councils, but stressed that Malaysia must continue improving its competitiveness as some countries were moving faster in certain sectors and should not take for granted its strong global connectivity despite its population of just 36 million.

Themed “Reforms for Resilience: Navigating Uncertainties”, SS2026 features discussions on key economic and financial issues, including economic resilience, wages, cost of living challenges, investments, energy security, Islamic finance and private healthcare costs. — Bernama