Sime Darby Property Bhd has taken a significant step in advancing employee welfare by announcing an 80 per cent increase in the minimum living wage for its B40 employees. Effective in 2024, the new wage level of RM2,700 per month represents a marked rise from the previous minimum of RM1,500. Economists suggest this move could serve as a new benchmark within the private sector, particularly for companies seeking to align compensation with the rising cost of living.
While the revised wage still falls short of the RM3,100 monthly living wage recommended by Bank Negara Malaysia and government-linked investment companies (GLICs), it has been welcomed as a progressive development. Economist Dr Geoffrey Williams described the increase as a positive initiative, acknowledging that it demonstrates the capacity of large corporates—especially GLICs and government-linked entities—to improve the financial standing of lower-income workers.
On 1 May, six GLICs, namely Khazanah Nasional Bhd, Permodalan Nasional Bhd (PNB), the Employees Provident Fund (EPF), Kumpulan Wang Persaraan (KWAP), Lembaga Tabung Angkatan Tentera and Lembaga Tabung Haji, implemented a RM3,100 living wage policy for all permanent Malaysian employees under the Finance Ministry’s GEAR-uP initiative. This framework seeks to consolidate and optimise GLIC contributions to national economic growth.
“The RM2,700 offered by Sime Darby Property is slightly below the RM3,100 standard, but it remains a substantial improvement and a meaningful threshold,” said Williams. “It clearly benefits their lower-paid staff, though greater transparency is needed in terms of how many employees will be impacted.”
As of 1 February, Malaysia’s national minimum wage stands at RM1,700 for businesses with five or more staff, as well as enterprises within the Malaysia SME and Small to Medium Enterprises (MASCO) category. Companies with fewer than five employees are required to comply with the new minimum by 1 August.
Putra Business School’s economic analyst, Professor Dr Ahmed Razman Abdul Latiff, praised Sime Darby Property’s decision, observing that RM2,700 is near the national median income level. He noted the broader socioeconomic implications of such a wage increase, highlighting not just improved living standards but also higher contributions to the Employees Provident Fund, which could significantly enhance post-retirement quality of life.
“This is a step forward that should be emulated by other major corporations, especially those with large workforces in urban areas. It will also help close the wage gap between senior management and rank-and-file employees,” said Razman.
Dr Mohd Afzanizam Abdul Rashid, Chief Economist at Bank Muamalat Malaysia Bhd, remarked that the decision could establish a new standard in wage setting and support talent retention in a competitive labour market. He pointed out that own-account workers (OAWs) have steadily grown at an annual rate of 2.9 per cent from 2019 to 2024, reaching 3.1 million people.
“Younger demographics are increasingly opting for gig work and self-employment. Competitive and stable wages can be a powerful draw for talent, although factors like career development and flexible working hours remain equally important,” he said.
Afzanizam added that while RM2,700 is a commendable start, income adequacy varies depending on geographic location and household composition. Referring to EPF’s Belanjawanku guide, he explained that a single individual in the Klang Valley typically requires RM2,800 per month, while a family with one child may need more than RM6,400 to meet basic living expenses.
“Wage policies must reflect both skill level and real income needs, taking into account the local cost of living. Policymakers must explore diverse strategies to ensure living costs are kept in check,” he added.
Sime Darby Property chairman Datuk Rizal Rickman Ramli emphasised that the decision was made in response to the rising cost of living and reflects the company’s commitment to the financial wellbeing of its workforce.
“This initiative highlights our commitment to financial stability and the well-being of our workforce, particularly those most impacted by rising living costs,” he stated in the group’s Integrated Annual Report 2024.
As at 28 March, Sime Darby Property’s major shareholders included Amanah Saham Bumiputera (36.73 per cent), EPF (11.08 per cent), KWAP (6.25 per cent), and PNB (5.23 per cent).
-Business Times
