Everyone has an aspirational salary.

Ask anyone on the street, and they’ll come up with a range of different salaries that they’re comfortable with.

Some may say that RM4,000 is enough, while others won’t be nearly satisfied with RM10,000 per month.

So, how much is sufficient, really?

In 2018, Bank Negara Malaysia published a report estimating the living wage of Malaysians.

The figure, which dated 2016, indicated that a single adult requires RM2,700 to live a “meaningful life.”

There are a few things to note from the report.

First of all, the “living wage” differs from the minimum wage (currently RM1,500) in several areas.

According to BNM, it is not a statutory requirement, unlike the minimum wage, which takes into account the effects of policies, employment, and job creation.

Next, a living wage extends beyond the basic necessities for survival. It should provide for “social participation and financial security.”

You should be able to afford a trip to visit family and friends during festive seasons and occasionally purchase gifts for family members during birthdays or visits.

Also, financial problems should not be a source of persistent stress.

That is why the living wage is significantly higher compared to the minimum wage. It is the minimum pay that allows you to participate in society.

Beyond this, everything else is aspirational.

Think of it as a luxury that fulfils one’s lifestyle beyond the average, such as spending on the latest gadgets and traveling abroad.

Factoring inflation, RM2,700 in 2016 is equivalent to RM3,100 right now.

This, by right, is supposed to be the starting wage for fresh grads (ie. degree holders).

But it is far from what most Malaysians are currently receiving.

In fact, as of March 2024, 57% of them have salaries below RM3,000. A staggering 34% of the population, accounting for 2.04 million individuals, earn less than RM2,000 per month.

What’s more disturbing about the numbers is that the distribution of wealth decreases exponentially as the figure increases, but it abruptly skews toward the rich.

7% of the people have a monthly income of more than RM15,000 per month.

This may not even be the full picture of how wealthy some of these people are. For all we know, the graph may look exactly the same, with the extremely wealthy hoarding most of the money.

In Malaysia, junior engineers are paid almost the same as a McDonalds waiter.

I came across a 2022 survey done by the Board of Engineers Malaysia (BEM).

Apparently, 37% of engineers had a basic starting pay of less than RM2,000 in 2021.

Imagine, someone who went to university to study a high-skilled degree, only to be paid almost the same as a waiter.

It’s no wonder why Reddit is full of personal opinions on NOT to pursue engineering as a youngster.

An average apartment costs about RM582,000 right now.

From 2009, housing prices have grown at a compounded rate of 7.11% per year.

At 4% financing, the monthly mortgage payment adds up to RM2,779 per month, across 30 years.

By budgeting, your mortgage payments should not exceed a third of your monthly income.

This means that, to afford a RM582,000 apartment, you should earn at least RM8,300. But from the distribution of wages (refer to chart above), only 16% of Malaysians earn above this range.

Malaysia’s wage crisis is obviously a systemic issue.

This is due to multiple factors, namely:

• Misalignment between education and job demand.

• Malaysia heavily relying on cheap foreign labour.

• Low creation of high-skilled jobs.

Etc.

But the overwhelming factor to our low wages is stingy employers.

The picture below is the percentage of how much a company makes and how much employees get, after our GDP numbers.

It's heartbreaking.

Malaysians are so underpaid that some feel it’s pointless to work harder.

Because even if they do, employers may not give them the raise they need.

It’s a vicious cycle.

Employee loyalty is only reserved if your firm compensates you fairly.

Remember this, folks.

If you feel exploited in your workplace, or the environment is not conducive for you to grow, then don’t hesitate to job hop. You don’t owe them anything.

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That’s all for this week’s newsletter!

Disclaimer: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.