S’poreans Earn Nearly Double Our Salaries. Here’s Why Malaysia’s Wage Problem Won’t Fix Itself

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Malaysians have watched their cost of living climb for years while pay cheques barely move, and according to the Consumers' Association of Penang (CAP), that's not just a wage problem

In fact, CAP president Mohideen Abdul Kader argued that the problem behind the persistent low wages is actually a structural one.

In a recent opinion piece, Mohideen emphasised that simply raising the minimum wage won't fix what's broken. The real issue, he said, is how Malaysia's entire economy creates and shares value.

Here's what CAP said needs to change.

One of the biggest problems is that Malaysia built its economy on being cheap

CAP said Malaysia's growth was powered by a strategy that worked for decades: keep labour costs low to attract investment.

While it industrialised the country and lifted people out of poverty, it also meant businesses had little incentive to invest in higher-value production, innovation, or productivity, because staying cheap was easier than becoming more competitive.

Now, CAP added, that trade-off is catching up with Malaysians as salaries haven't kept pace with the cost of living, even as the economy continues to grow.

Another problem is that workers get 30%, while everyone else gets 70% of the pie

That's the number CAP pointed out from a Khazanah Research Institute (KRI) podcast episode examining Malaysia's economic structure: Malaysian workers take home only around 30% of what their companies earn, while roughly 70% goes to business owners and capital holders.

CAP said this split is far more lopsided than in many developed economies, suggesting that Malaysia's growth hasn't been shared fairly with the people producing it.

The issue, CAP said, extends further up the career ladder.

A separate KRI report tracking the career progression of Malaysia's skilled talent found that nearly 40% of experienced graduates are underemployed, stuck in jobs below their qualifications, with their earning potential capped as a result.

Foreign labour isn't the cause; it's a symptom of the underlying problems

CAP also pushed back on a common narrative that Malaysia's reliance on foreign workers is what's driving wages down.

Instead, it argued that this dependence exists because businesses have not had enough incentive to change.

When the system rewards low operating costs over automation and innovation, cheap labour becomes the default solution rather than a temporary measure.

The result is that manufacturing, construction, agriculture, and food services remain locked in what CAP called a low-wage equilibrium.

Why your local durian farmer isn't getting rich

Agriculture, CAP said, is the clearest example of Malaysia leaving money on the table.

Farmers and fisherfolk grow the raw products, but the bigger profits often come later through processors, wholesalers, and retailers. This leaves primary producers earning the least and makes the industry less appealing to younger Malaysians looking for a future.

CAP's solution is for Malaysia to stop exporting raw goods and start building stronger brands around them.

It pointed to Thailand's One Tambon One Product (OTOP) programme, where rural communities receive support to process, brand, and sell products like herbal teas, dried fruits, coconut-based goods, and natural cosmetics, turning raw ingredients into premium products.

Crucially, smallholders weren't left to figure this out alone.

Community enterprises, cooperatives, and government agencies stepped in to handle the processing, branding, and marketing, areas where individual farmers rarely have the resources to compete.

The problem is not that Malaysia doesn't have the tools; it's that the country isn't using them properly

According to CAP, agencies like Malaysian Agricultural Research and Development Institute (MARDI), the Department of Agriculture, and the Department of Fisheries have already developed the research, technology, and value-added products needed.

The missing piece is the intent and the ability to scale.

These breakthroughs need financing, commercialisation support, processing facilities, and market access to move beyond pilot projects and actually raise incomes for businesses, farmers, and fishermen.

So what's CAP's actual solution?

Rather than leaning on minimum wage hikes alone, CAP wants Malaysia to fix the conditions that make higher pay sustainable.

Its proposals include:

• Speed up the shift toward higher-value industries
• Invest heavily in Technical and Vocational Education and Training (TVET)
• Push innovation, automation and productivity gains
• Help local businesses move up the value chain
• Produce more value-added goods in agriculture, fisheries, and energy
• Gradually cut reliance on low-skilled foreign labour as productivity rises

CAP also dismissed fears that higher wages will trigger inflation, as long as pay rises track real productivity gains and not just rising labour costs.

The bigger picture

South Korea, Singapore, and Germany didn't become high-income economies by staying cheap. They got there by investing in skills, technology, and industries that create real value.

CAP argues that Malaysia is standing at the same fork in the road.

The goal isn't just to pay workers more; it's to build an economy where businesses create more value, workers get a fairer cut of it, and higher wages stop being a policy demand and start being the natural result.