KUALA LUMPUR (Sept 4): The steady decline in the number of unionised workers may have contributed to Malaysia’s sluggish wage growth as employees are left with little bargaining power, according to an economist.
The downtrend in union membership over the past four decades has created an imbalance in the labour market, weakening workers’ bargaining power and hindering wage growth, said Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid.
“This is quite perplexing to see,” he said. “In a way, the voices of labour are unrepresented.”
Afzanizam was delivering a presentation at Malaysian Institute of Economic Research’s Brown Bag Talks Series on “The Thirteenth Malaysia Plan: Policy Empowerment to Sustain Economic Growth”.
Low wages have long been a sore point for Malaysians, with the share of income going to employees remaining stagnant at just over a third of economic output and below the government’s target.
Activists have blamed Tun Mahathir Mohamad for weakening trade unions during his first 22-year stint as prime minister, and successive administrations for failing to reverse some of his policies, including the push for company-level in-house unions.
The share of unionised workers has since fallen from 11% in 1982 to 8% in 2002, and by the end of 2023, the proportion had declined to just about 6%.
“I'm not saying that we should have a bigger union per se. Perhaps some mid-point should be achieved, but the trend is going down, and that could really explain why it’s difficult for salaries to go higher,” Afzanizam said.
Official data point to widening gap between nominal and real median monthly salaries in recent years, signalling that wage growth has not kept pace with the rising cost of living, he said.
Afzanizam also flagged the persistence of underemployment, particularly among young graduates.
Skill-related underemployment, while has been improving since the Covid-19 pandemic, remains elevated at 35.9% as of the fourth quarter of 2024, compared with 32.5% in the first quarter of 2018, he noted.
“The labour market ecosystem does not favour workers,” he said, stressing that “salaries and wages are inefficient as workers are not being paid accordingly, while underemployment remains prevalent.”
Without the minimum wage policy, Malaysia’s salary levels would likely have been even lower, underscoring the role of structural support in protecting workers’ livelihoods, he added.