Our Prime Ministry Najib announced that he will planning make Malaysia a high income country, like the developed countries in Asia, America and Europe. To reach that status, the per capita income of a Malaysian citizen must be at least US$15,000 and currently the per capita income is US$7000.
Based on the history record, Malaysia per capita income was US$500 at independence in 1957. Thus, it took 52 years to achieve $7000. Do you think Malaysia can reach a per capita income of US$15,000 in the year 2020? Or our government needs to take some action to increase our citizen wages?
The solution is not as simple as many think. If it’s that simple, then every country had tried to do the same to increase their citizen wages already, and every country can become high-income country. Many people think currently they earn RM2,000, so if suddenly their wages being raised to RM4,000, then they will become high income countries and living standard become higher.
It doesn’t work in this way, if everyone wages double within short time period, then it only can cause inflation issue, in which the bread now RM2.30, become RM4.60, so eventually everything will back to square one.
You might earn RM4,000, but your purchasing power remain the same, then what’s for wages increased? It will add more negative impact if inflation rate as same as wages increment rate. This is because suddenly the money value become 2x more, but supply of product remains the same, so higher demand greater than same supply, finally the result is always inflation.
For me, wages increment must followed by productivity gain. You can utilize your resource more efficient and added more value on your product. Just take a simple idea, previously we chop down tree and export it directly to oversea, which you can earn RM1,000/ton, but now you process the timber into high class furniture (value added), then you may sell/export it at RM5,000 of furniture.
Then, you might earn RM4,000 from the process, then it is shared among all employee, and employer. At last, everyone can earn more, so if you can utilize efficient your resources, added more value on your product, and create value through creativity and innovation, then only consider transforming into high-income country.
Just like a company, you can demand as much as wages increment, but your effort doesn’t result in company to make profit, and forcing company to pay you 2x wages from current, will only result in financial trouble for the company and possible company has to close down eventually.