Behind the widening wage gap between skilled and unskilled workers

The median salary for skilled workers in 2022 rose to RM4,506 but for semi-skilled and unskilled workers, it was only RM1,593 and RM1,274. (Bernama pic)

PETALING JAYA: The proposed progressive wage policy has sparked discussions about the increasing wage gap between skilled and unskilled workers.

Earlier this month, economist Noor Azlan Ghazali called for the policy to focus on unskilled workers as their wages were not growing fast enough.

He said the median salary for skilled workers in 2010 stood at RM2,600, compared to RM1,200 for semi-skilled and RM840 for unskilled workers.

Just 12 years later, the median salary for skilled workers rose to RM4,506 while for semi-skilled and unskilled workers, it only increased to RM1,593 and RM1,274.

The increasing wage gap

According to economist Yeah Kim Leng, low and semi-skilled workers experience slower wage growth because the small and medium enterprises where they usually work will control operating costs by lowering workers’ salaries.

Yeah said employers often suppress the wages of semi-skilled workers, who can be easily replaced with cheaper alternatives such as foreign workers who cost even less.

Management consultant Koay Gim Soon of Mercer Malaysia said low and semi-skilled workers’ salaries were difficult to increase once they have “reached the ceiling” of their salary range.

“Should there be no changes in their scope of work, it is difficult for their salary to grow because the responsibilities remain the same,” said Koay, a market manager with Mercer, an international financial consulting firm.

Union leader Rosli Affendi said workers’ lack of influence in their annual salary increments contributed to the increasing wage gap.

Rosli, the secretary-general of National Union of Hotel, Bar and Restaurant Workers Peninsular Malaysia, said the current law does not require employers to revise workers’ salaries annually. The growth of low-level workers’ wages was left to management discretion.

“If no union is involved, most of their salary revision is tied to the conditions of their employment contract and under the management’s discretion and open to abuse.

“And they have no avenue to channel their complaints as the Employment Act 1955 has no provisions for salary revision and annual increment,”

He added that the government should intervene by calling a meeting with workers groups and employers groups to refine the policies for salary revisions.

Taking on more

Yeah believed workers should strive to exceed their key performance indicators and shoulder up more responsibilities when promotion opportunities are available.

Koay agreed, saying proactive employees who acquired new skills or took advantage of training initiatives would be in a better position to gain higher salaries.

“It wouldn’t make commercial or financial sense for the employer to constantly increase salaries for the same results and output.

“Employees can look into leveraging on any available reward scheme from the company, upskilling to a more client-focused role, or striving for outperformance to achieve better job grades.”

Branching out with a sideline

Another economist Geoffrey Williams shared a different perspective, saying low, semi-skilled workers should participate in the gig economy or branch out to other side hustles to improve their income.

Williams, of the Malaysia University of Science and Technology, said as the labour supply remains abundant, workers will experience more competition within the industry, thus lowering the prospects of getting a raise from employers.

“The market is already pushing for this trend,” he said, as more workers were joining the informal sector, “and the results are positive. They are earning more and doing better” without any bosses over them. - FMT