Malaysia: Income growth must match cost of living control

Malaysian experts are calling for a balanced approach to economic policy, emphasizing that efforts to increase citizens' income must be synchronized with measures to control the cost of living. Professor Dr. Ahmed Razman Abdul Latiff of Putra Business School argues that salary hikes alone are ineffective if the costs of basic necessities outpace wage growth, thereby negating any real improvement in purchasing power.

"Increasing income is indeed necessary, but it must go hand-in-hand with efforts to manage the cost of living. We need to look at increases for both income and expenses," Ahmed Razman stated. He illustrated that a RM300 salary increase would be insufficient if housing, food, transportation, and childcare costs rise by more, leaving citizens still feeling financially strained.

“

Increasing income is indeed necessary, but it must go hand-in-hand with efforts to manage the cost of living. We need to look at increases for both income and expenses.

The upcoming 2027 budget, according to Ahmed Razman, needs to be comprehensive. It should aim not only to raise incomes and create high-paying jobs but also to ensure that the costs of essential goods and services do not escalate unreasonably. The ultimate goal, he stressed, is to achieve higher disposable income, not just higher nominal wages.

“

If income rises by RM300 but the cost of housing, food, transportation, and childcare increases by more than that amount, people will still feel pressured.

Finance Minister II Datuk Seri Amir Hamzah Azizan previously announced that the Fifth Madani Budget 2027, to be presented on October 9, will prioritize boosting income, expanding quality employment opportunities, and addressing the cost of living through targeted and sustainable approaches. The budget aims to ensure economic growth benefits are widely shared across society, focusing on raising income ceilings, increasing minimum wages, and strengthening good governance.

Ahmed Razman also suggested that while more incentives for employers to raise wages are welcome, they should be conditional on productivity gains. Instead of direct payments, the government could offer tax deductions, matching grants, or contribution incentives to companies that implement sustainable wage increases, particularly when linked to employee training and skill development. This approach, he believes, would foster long-term growth rather than short-term fixes.

“

The ultimate goal is not just higher income, but higher disposable income.