Decrease of labour income share to 32% is shocking –  Labour Law Reform Coalition

THE Labour Law Reform Coalition (LLRC) was shocked to learn from the Madani Economy document that Malaysia’s labour income share has dropped to 32.4% in 2022, a sharp decrease from the 35.2% in 2017 (Bank Negara Malaysia Annual Report 2018). 

That means, the workers’ share of the economy has rolled back to the status in 2011 after the Covid-19 pandemic. 

Although the pandemic has severely and negatively impacted the jobs and incomes of Malaysian workers, LLRC had highlighted before that the low unionisation rate and lack of appropriate bargaining mechanisms at workplaces during the pandemic would lead to wage cuts unilaterally imposed by employers. 

In addition, the decrease in the labour income share is also attributed to the lack of a concrete roadmap of the previous governments. The ambitious 48% target of labour income share stated in the Shared Prosperity Vision 2030 (SPV2030) remained elusive – a casualty of the absence of a resolute roadmap and audacious strategy to guide the way. As a result, the SPV2030 was doomed to fail. 

The Madani government must learn from the previous mistakes and create a concrete roadmap to achieve 45% labour income share in the next 10 years. Among other measures, they should also have a national action plan on trade union development as a step to strengthen trade union bargaining power, which will certainly lead to higher wages and benefits for workers in Malaysia. 

Trade unions act as the voice of the workforce – campaigning for equal treatment, improved working conditions and greater remuneration. The efficacy of these unions, however, is strongly based on a supportive legislative framework and dedicated involvement by the government. 

We urge the government to step up to the challenge and a course consistent with the Madani values of fairness, inclusion, and social advancement. The Madani government has a chance to guide the country towards a future in which workers’ wages and benefits reflect the full value of their contributions. It is a vow to respect economic ideals of equality and justice. – The Vibes, August 17, 2023 

N. Gopal Kishnam and Irene Xavier are co-chairpersons of the Labour Law Reform Coalition, a broad coalition of 58 Malaysian trade unions and worker organisations, serving the Malaysian union community as a whole