When Najib became PM in 2009, two of the chief complaints were low wages and inequality. He has thus taken steps to address these two problems – among many legacy problems left behind by Mahathir and his policies
In the year 2013, the govt via the Department of Statistics (DOS) started measuring the Compensation to Employees (CE) as a share of our GDP.
Also known as the Labor’s or Worker’s Share of GDP, it measures how much of the country’s economy goes back to the workers in various forms such as wages and salaries, BR1M, benefits, bonuses etc each year.
It is an important measurement to determine how fair the country is to the employees compared to the profits that goes to the owners of companies.
Due to various policies and measure by the Federal Govt such as BR1M, minimum wages, subsidy rationalization, exemption or lowering of personal taxes which are all designed to bridge the income gap and reduce equality, this Compensation to Employees ratio has been slowly but steadily rising every single year since 2013.
The CE ratios are:
2016 35.3% (as per latest DoS report released today)
This means that in the year 2016, 35.6% of the GDP now goes to the workers – instead of to the bosses.
The CE ratio has typically been very low for Malaysia due to Mahathir’s policies of heavy subsidies and keeping worker’s salaries low in order to attract foreign manufacturers who wanted to exploit our cheap labour.
When Najib became PM in 2009, two of the chief complaints were low wages and inequality. He has thus taken steps to address these two problems – among many legacy problems left behind by Mahathir and his policies.
Even at 35.6%, it is still low compared to developed countries where the ratio is typically in the range of 40% to 50%.
There is little doubt that Malaysia has been actively addressing our income inequality issues since 2009 to be fairer to all – which is why the income equality index have shown great improvements.
There is also little doubt that income levels have been rising since 2009 – especially for the lower income groups.
What is the point of being a high-income country if the wealth is not shared more equally to all?