Bank Negara Malaysia: What is Living Wage and why is different with minimum wage?

Bank Negara Malaysia: What is Living Wage and why is different with minimum wage?

What is Living Wage anyway?

Bank Negara says this about Living Wage. “A living wage is an income level needed for a household to afford a minimum acceptable living standard, which includes the ability to participate in society, the opportunity for personal and family development, and freedom from severe financial stress.” Do take a look at the image below. For the full study, refer here. Very comprehensive report by Eilyn Chong and Farina Adam Khong Source: bnm.gov.my

Basic Needs means something like the below

Every night, one has a place to sleep which is not affected by the environment. It could be a room inside a government sponsored place. It could be a free shelter by Non-Governmental Organization (NGO). Basically, the person could sleep without the worry of rain water falling unto him (sleeping in the garden, without the worry that some animals would be walking past him (sleeping by the roadside).

He should have meals in the day and when he is sleeping, he feels full and not hungry. He should have enough money to pay for all these simple meals and he has enough without the worry that tomorrow could be a day of hunger. He has a stable income, just that he could not simply spend it and has to be very careful with what he spends it on.

He has clothes to wear. Proper ones. He may not have 5 pairs of jeans but he would maybe have 2 pairs. Perhaps enough clothing to wear for working days and also off day. He is not wearing some torn clothing. He has maybe a pair of walking shoe and another pair of sandal. he does not need to rely only on one pair and feel sad when he suddenly has nothing to wear.

In other words, he has his basic needs fulfilled. However, this also meant that he has barely anything extra and would have to spend very carefully. Any unforeseen circumstances would push him back financially. He will always have the stress that he wanted just a little more money, he needed just to occasionally buy himself a latte at ZUS Coffee, he wishes to have just a few days off where he is not staying home and do nothing but maybe avail himself to some clean and basic hotel rooms and just relax by the beach or enjoy some strolling in some new places. He just need to be able to afford a RM500 flight per year. Just one time? We come to the next stage which is Living Wage.

Living Wage means something like the below

Beyond just exactly enough, this person has something extra. Probably a few hundred ringgit extra where after covering all the basic needs above, he could occasionally have a nicer breakfast or a nicer lunch or perhaps a nicer dinner. Note, occasionally. He would also be able to participate in weekly badminton games with his friends. Those may cost him RM30 per game (his share) and RM120 per month.

He will have fun, he could exercise and he has good interactions with his friends. Alternatively, he could join some half-marathons every few months. The participation fee could be RM100 but he is okay as it is just once every few months. At the end of every year, he could take a short year end break. Maybe to Langkawi… Maybe to Kuching where the flights and the hotel rooms and expenses for 4-5 days could cost him RM1,500 and he is able to afford it.

If he has a family, he is able to provide for his family by bringing them maybe for a road trip in his basic car. Everyone’s happy with this trip and he knows he could afford the toll, the hotels and others without the need to borrow. At the end of the day, because he has some extra income which allows him to do more than just the basic stuffs, he would also worry less.

Unless he spends way overboard, he will live a meaningful life and he is perhaps a Toastmaster too! 🙂 Fees are probably just RM60-80 per month depending on the club you join. Learn communication and leadership skills to go higher in the corporate world. This is an investment.

My wish is that all companies provide a living wage

I say this from the company point of view yeah. When our employees live a better life, they can work better and contribute more. Okay, with regards to the point that the company could not afford… then please ensure the salary of the C-suites are NOT increase beyond say 100 times of your lowest paid employee? I mean, if someone is paid RM2,000 per month and the C-Level gets RM200,000 per month, is this not already very high?! Think about it.

If the company truly could not afford and it’s a SME, then the owner better NOT be buying an expensive car every other year and put that under company expenses yeah. That RM400,000 paid for a new car versus just driving a national brand meant many employees could get the extra amount needed to push them from basic to living wage. If you can afford to buy, then you cannot say you cannot afford to pay living wage lah.

What are your thoughts? Do you also think like me when it comes to living wages? I do hope some important people would read this article. We will talk about aspirational income in our next article.

Cheers.

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