THE trend of wages failing to keep up with inflation is expected to continue this year, said an economist, although the rise in the prices of goods will be lower in 2018 compared with 2017.
Economist Azrul Azwar Tajuddin said in 2017, the inflation rate or the rate at which prices for goods and services rose, averaged at 4%.
But average wages, according to the global managing consultant Korn Ferry Hay Group (Korn Ferry), only grew by 1.3%.
In 2018, Azrul of Jasmiza Solutions, a consulting firm, estimates that inflation will average at below 3.5%.
“Some workers will see their wages increase at a better rate. But for the average wage-earner, it will be another year of slow wage growth that does not keep up with inflation,” Azrul told The Malaysian Insight.
Prices for food items are also expected to remain high due to rising global oil prices despite the lower rate of inflation, he said.
Korn Ferry estimates that salaries will rise on average by 3.2% in 2018.
“One of the problems in 2018 is that we expect to see between 30,000 and 50,000 people losing their jobs,” he said, citing figures from the Malaysian Employers Federation (MEF) and the Human Resources Ministry.
“When that happens, there will be a lot of workers in the market competing with newer entrants, such as school leavers and graduates for jobs.”
In such a situation, employers will have more influence in dictating wages because of the large supply of unemployed workers.
Although the government claims that 300,000 jobs are expected to be created in the manufacturing, services and agricultural sectors, Azrul asked whether those retrenched will be absorbed.
“The question is will those who are retrenched have the necessary skill to take up the new jobs? Have they undergone retraining or reskilling?
“Will the pace of these new jobs also be adequate for the retrenched and new entrants, such as school leavers?”
Among the industries expected to do well in 2018, and which could see wage increases, are banking and financial services, construction, agriculture and businesses in technology and e-commerce, Azrul said.
Industries that are expecting a slowdown due to a stronger ringgit include export-oriented manufacturing and domestic tourism.
Similarly, the oil and gas sector is not showing signs of recovering despite the rise in global crude oil prices while the property sector is experiencing a glut of high-end and commercial properties.
Industries, such as food, personal care products, healthcare, education, telecommunications, maintenance and repair, used goods and green tech, are expected to remain stable, Azrul said.