Ambitious goal to improve labour income share to 45%

The Madani Economy target is deemed attainable with the right policies and strategies 


ON JULY 27, Prime Minister (PM) Datuk Seri Anwar Ibrahim unveiled the groundbreaking Madani Economy policy framework as the new economic paradigm to propel the country forward. 

With the tagline of “Empowering the People”, the comprehensive strategic initiative is set to position Malaysia as a distinguished economic force in the South-East Asian region, marking a significant step toward regional leadership. 

Madani Economy will serve as the foundation for other policies to be announced later, and has set short-term targets already in motion to address pressing issues affecting the Malaysian population, namely accelerating implementation of public projects, especially schools and dilapidated clinics, and eradicating hardcore poor via the Payung Rahmah concept. 

Key to the ambitious objectives under Madani Economy are seven intermediate indicators as medium-term targets to be achieved within a decade. 

  1. Elevate Malaysia into the echelons of the world’s top 30 largest economies. 
  2. Secure a place of eminence within the top 12 of the esteemed Global Competitiveness Index. 
  3. Increase the percentage of the labour income share to 45% of the total GDP. 
  4. Boost women’s participation in the labour force to 60%. 
  5. Improve Malaysia’s ranking in the Human Development Index to top 25. 
  6. Elevate the country’s position in the Corruption Perception Index to best 25. 
  7. Target a GDP deficit of 3% or less to move towards fiscal sustainability. 

Through these intricately crafted benchmarks, the Madani Economy framework not only charted a trajectory of economic advancement but also symbolises Malaysia’s dedication to take up regional economic leadership. 

Speaking to The Malaysian Reserve (TMR), JobStreet Malaysia MD Vic Sithasanan said that the target to improve the labour income to 45% of total income is an ambitious goal by the government, and yet is attainable with the right policies and strategies. 

“Not to mention, this objective could also be achievable by focusing on empowering small and medium enterprises (SMEs), enhancing skills and education, attracting foreign direct investment (FDI), and addressing gender disparities in the workforce,” he said. 


For employees to play their role, Jobstreet’s Sithasanan opines they must tremendously improve their skillset

As at 2022, the national labour income in the form of wage and salary out of total income or GDP stood at 32.4%. 

Collective Efforts 

Sithasanan said the government must not be solely dependent to improve the labour income as many parties need to get involved, such as the companies and also the employees themselves, in order to realise the vision. 

“As for the companies and employers, they ought to make investments on employee training and development to improve the skills and also productivity. 

“Additionally, companies may recruit and keep brilliant employees, and build a skilled staff by providing competitive compensation and benefits. 

“Embracing technology and digitisation is another way companies can improve income prospects. It leads to greater efficiency and competitiveness, ultimately resulting in better financial performance and opportunities for higher wages,” he said. 

For employees to play their role — especially in the now open and broad digital economy ecosystem — he opined they must tremendously improve their skillset. 

From JobStreet’s recent research, Sithasanan said they discovered that 70% of Malaysians were determined to develop their professional skills. He further asserted that career advancement and better income prospects could be delivered by showing productivity in seeking growth opportunities, demonstrating a strong work ethic, and taking on new challenges. 

“New initiatives that directly support the government’s mission, such as targeted training programmes, shared digital platforms and the usage of relevant training materials also play a big role in addressing these targets head on. 

“By collectively working toward these goals, companies and employees can actively support the government’s efforts to increase labour income and create a more prosperous economy for all,” he said. 

Salary Transparency 

Overall, in order to improve the labour income as a whole, Sithasanan suggested that it is significant for the government to ensure salary transparency across all sectors and also by adopting public-private partnerships. 

He asserted that by collaborating between sectors such as government, private companies, industry associations and educational institutions, it could design a path for effective programmes that address skill gaps and align training with industry needs. 

“This ensures the workforce is equipped with the necessary skills for higher-paying jobs in the digital economy. 

“Additionally, the government can offer incentives for technology adoption. By providing tax incentives or grants, especially to SMEs, companies can be encouraged to embrace digital technologies and processes, leading to productivity gains and income growth,” he said. 

Sithasanan emphasised the importance of promoting transparent wage policies, suggesting that encouraging companies to adopt such policies could effectively bridge income gaps. Through wage structure transparency, companies can ensure that employees are fairly compensated according to their skills and contributions. 

“By fostering a collaborative environment between the government, businesses, and employees, Malaysia can make significant progress toward achieving its goal of increasing labour income and creating a more prosperous economy for all,” he said. 

Meanwhile, Pacific Research Centre principal advisor of Malaysia and Senior Fellow at Singapore Institute of International Affairs Dr Oh Ei Sun also shared the same perspective — saying that it is an ambitious target, considering that the global and domestic economies are still struggling. 

Oh also suggested skills training and improvement of working attitude should also be applied as additions to the higher labour 

wages mandate. “Policies need to be widely consulted before being adopted,” he said. 

Oh says while technology could facilitate both business and livelihoods of the people, it comes at a high cost

Transformative Digital Economy 

In the technology-driven era, the world has witnessed various significant changes within their surroundings. With the creation of artificial intelligence (AI), smooth transaction systems even in the hawker stalls, it was proven that people have started to embrace technologies in their life. 

Moreover, with the technology developed, new business lines also have started to appear and introduced to the public. 

Oh said while technology, without doubt, could facilitate both business and livelihoods of the people, it nonetheless came at a high cost. 

“More incentives, such as soft loans if not grants, are needed to assist companies and individuals to undergo the transition into adopting more technology elements,” he added. 

Plus, for the government to increase the country’s revenue, he contended that it’s crucial to improve the ease of doing business, for example in expedited approval process, and also more structured risk management. 

According to Sithasanan, the benefits of the digital economy have been transformative — from streamlining costs and increasing efficiencies to creating new business models. 

“It also plays a crucial role in opening up new job opportunities in tech-related fields,” he said. 

Moreover, the digital economy’s business has offered competitive salaries and various benefits for the individuals that are employed in the industry. 

“Jobstreet’s recent Salary Report found that digital workers earned a 28% median salary increase in the past year, providing people with a pathway to higher incomes. 

“Additionally, technology enables individuals to work remotely, offering flexibility and access to a global job market. This allows employees to find jobs that align with their skills and expertise, potentially leading to better earnings prospect,” he added. 

  • This article first appeared in The Malaysian Reserve weekly print edition