Malaysia GE14

Rising wages could strengthen Najib's position

Malaysia's economic recovery strengthens Datuk Seri Najib's position as he seeks to retain his power in a general election that must be called by August.
Malaysia's economic recovery strengthens Datuk Seri Najib's position as he seeks to retain his power in a general election that must be called by August. PHOTO: EPA-EFE

KUALA LUMPUR • Malaysia's Prime Minister Najib Razak heads into a challenging general election in the next few months with a trump card up his sleeve: rising wages.

Wages in the private sector increased 6.3 per cent in the fourth quarter from a year earlier, after gaining 7.5 per cent in the previous three months, according to data from the central bank. Wage growth could remain relatively strong in the coming quarters due to a robust economy, said senior analyst Chia Shuhui at BMI Research in Singapore.

Workers in the manufacturing industry are getting some of the biggest increases, with wages rising more than 9 per cent every month since April. The Premier has also given bonuses to civil servants and retirees in the latest budget.

"More money in the pocket of consumers will end up being better for the incumbent government," said analyst Ibrahim Suffian at the Merdeka Centre for Opinion Research in Kuala Lumpur. "It certainly will help them keep existing voters on their side."

Malaysia's economic recovery strengthens Datuk Seri Najib's position as he seeks to retain his power in a general election that must be called by August. The jobless rate held at 3.3 per cent in December, matching the lowest since 2015. Gross domestic product increased 5.9 per cent last year, the fastest pace in three years.

Salaries in services and manufacturing are estimated to expand at a rate of mid-single digit in the coming quarters, with skilled workers getting bigger pay increases because of a shortage of professionals in some industries, said Ms Julia Goh, an economist at United Overseas Bank in Kuala Lumpur.

"This ushers in a euphoric sentiment which usually favours the incumbent party," said Mr Oh Ei Sun, principal adviser to the Pacific Research Centre in Malaysia in Kuala Lumpur. "But questions remain as to how appreciable an effect it would have on urban voters who hold a more critical view of the government."

 
 

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A version of this article appeared in the print edition of The Straits Times on February 28, 2018, with the headline 'Rising wages could strengthen Najib's position'. Print Edition | Subscribe