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LETTER | Recently, Mercer’s Total Remuneration Survey for 2023 reported that the average salary in Malaysia is expected to rise by 5.1 percent this year. Many might heave a sigh of relief that their salaries might be able to keep pace with the cost of living.

However, the inflation rate is expected to increase simultaneously because Malaysia’s purchasing power rises. This might suggest that Malaysia’s real wages do not increase if the percentage increase in the inflation rate is the same as that in the wages.

However, what worries us is that other issues might crop up and always receive little attention. For example, those who do not receive any increase in their salaries, especially farmers in rural areas, might fall behind others. They will struggle to survive the inflation.

Therefore, the poor become poorer. Income inequality might be greater. The poverty line might increase when there is inflation. So, many households are at risk of plunging under the poverty line.

The national poverty line stood at RM2,589 per month in 2022. Some households who earn higher than the poverty line before and do not receive any increase in salaries might stay under the poverty line.

University students who do not receive any increase in their study loans might grapple with a higher cost of living because the price of food might escalate. Some of them might decide to quit their studies or do a part-time job to survive the higher cost of living.

Therefore, a targeted and inclusive approach is essential to mitigate the adverse effects of inflation on various socio-economic groups.

By prioritising the needs of those not benefiting from higher salaries, the government can contribute to a more equitable and sustainable economic landscape.

MOHD SHAHIDAN SHAARI is an associate professor at the Faculty of Business and Communication, Universiti Malaysia Perlis.

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