COMMENT | Raise starting salaries if M'sians are to retire comfortably

COMMENT | I am about to reach middle age (what’s the definition of middle age again?) and I’ve been reevaluating if I actually want to retire from my work or not one day.

At the moment, I don’t think I’ll ever stop working because the truth is that I really enjoy what I do, and as the saying goes, if you like what you do, then you’ll never work a day in your life.

However, another saying goes, never say never, and as I was saying that I am reaching middle age, the thought of retirement has also come teasing at the edge of my brain.

So I click on the EPF app on my phone to check on how much I have in there so far. I’m not going to reveal how much I have here in this article, but it definitely has got me thinking a little bit more.

RM240k basic retirement goal

Recently, Khazanah Research Institute (KRI) released a report titled “The State of Households 2024: Households and the Pandemic 2019-2022”.

The report states that more than 90 percent of EPF members under the age of 30 will not have enough to meet even the basic retirement goal of RM240,000 by the age of 55.

According to the retirement fund, a person needs a minimum of RM35,000 in their EPF account by the age of 30 to reach that target of RM240,000 by 55. Also, the target of RM240,000 means that the said person will be able to have a monthly income of RM1,000 per month for 20 years after the age of 55.

Now if the basic retirement goal is RM240,000, which means a person will need to survive on RM1,000 a month for the next 20 years, I’m wondering if that is even possible in this day and age.

What happens if that person lives longer than 75 years old? I am also wondering when this basic retirement goal was made and if has it ever been updated for the current cost of living.

Low starting pay

The KRI report goes on to say that the reason for EPF’s young members having such low savings is the result of low starting salaries for those entering the workforce, which results in slower income increments and also, of course, the few years when we were suffering during the Covid-19 pandemic (loss of income, emergency withdrawals, etc).

I do not disagree. I remember when I first started working as a journalist in a local newspaper in 2000, my starting monthly salary as a degree holder was around RM2,100. It was okay for me then and I managed to work myself up over the years. It’s been almost a quarter of a century and I think I dare bet my kitchen sink that the starting salary for a journalist now isn’t that much different.

I think it is important that we raise salaries in the country to suit inflation and the rising cost of living, or at the very least, raise the starting salaries of those who are about to enter the workforce so that people don’t struggle as much as they do now.

Yes, I understand that the government of the day has said that this is something on the agenda, but is it really happening?

In the middle of this year, the Economy Ministry launched the progressive wage policy which is aimed at raising the wages of Malaysians.

The project is a voluntary plan that targets micro, small and medium enterprises to encourage them to raise wages for their employees. Under the plan, the government will subsidise companies that follow the guided salary base.

READ MORE: What’s the progressive wage policy and how much should you be paid?

At the moment, the project covers five sectors: manufacturing, construction, information and communication, professional scientific and technical activities, and wholesale and retail trade.

Companies that want to be a part of this project need to register with the government. The subsidies are for one year, and multinational companies and government-linked firms do not qualify.

Last month, Malaysiakini released a Kiniguide titled “What’s the progressive wage policy and how much should you be paid?” It’s quite a comprehensive feature which explains the project, shows the policy’s recommended salary table and more. You can click on the link to find out more about it.

It reads like a sound plan, but is it enough to make it only voluntary? Should it not be mandatory for all sectors? And why exclude multinational companies and government-linked ones?

Also, shouldn’t the government introduce more concrete plans to improve the economy and settle the issue of the rapid cost of living? We need more holistic policies and plans to address this issue.

What’s in for us in 2025?

With the tabling of Budget 2025 coming in just a few more weeks, it would be interesting to see what the government has in store for us and the country. It is worrying to realise that there are going to be so many Malaysians who won’t have enough savings once they retire, or whenever they require those savings.

Although I love my job and do not plan on retiring for as long as I can, I would like to actually have retirement as an option instead of having to work for the rest of my life out of necessity.

So with bated breath, I await to see what the government will announce come October, and also what the progressive wage policy project will result in.

ZAN AZLEE is a writer, documentary filmmaker, journalist and academic. Visit fatbidin.com to view his work.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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