Wage hikes affect Malaysia

Wage hikes affect Malaysia

KUALA LUMPUR (AFP): Deputy Premier Anwar Ibrahim said Saturday that Malaysia's economy was beginning to feel the heat as workers' productivity lagged behind wage rises.

From January to April, the manufacturing sector recorded a 6.1 percent productivity increase compared with an average wage rise of 11.7 percent, Anwar was quoted by Bernama news agency as saying.

"This figure is not satisfactory because it shows that our economy is beginning to feel the heat from rising wage claims and stagnant productivity, " he told 10,000 workers at a Labor Day solidarity gathering.

Malaysia's economic boom since 1987 has resulted in a labor shortage in sectors like agriculture, construction and industry, forcing employers to recruit foreigners.

The unemployment rate among the 20-million population was 2.8 percent last year, the lowest in recent years.

Anwar warned that excessive wage increase without corresponding rise in productivity was an "unhealthy trend" which would adversely affect economic growth, adding employers and workers would also suffer.