COVID-19 and Wages and Salaries Dynamics in Malaysia: A Blessing in Disguise?

• Published in: Indian journal of labour economics 2024-06, Vol.67 (2), p.373-388
• Main Authors: Subramaniam, Thirunaukarasu, O’Brien, Martin, Mansor, Norma
• Format: Article
• Language: English
• Subjects: Development Economics; Economics; Economics and Finance; Industrial Organization; Labor Economics
• ISSN: 0971-7927; 0019-5308
• DOI: 10.1007/s41027-024-00492-7

Predictors of wages and salaries (earnings) are investigated to track the impact of COVID-19 on wages and salaries dynamics in Malaysia for 2019 and 2020. Data obtained from Salary and Wages Survey (2019 and 2020) is used to estimate the Mincerian models for those years. The main findings are: Firstly, public sector employees receive lesser impact during COVID-19; secondly, the younger (15–19 and 20–24) and the older (60–64) workers experienced significant reduction in earnings; thirdly, citizens in public sector saw a large improvement in earnings compared to non-citizens; fourthly, ethnic Bumiputera in public sector received 4% lower earnings than the reference category (Indian ethnic) in 2019 but in 2020, this reduced by half; and finally from a regional perspective, employees in West Coast, both public and private seems to experience earnings reduction in 2020 closer to the reference category. In a way, COVID-19 is a ‘blessing in disguise’ as urban–rural and male–female earnings gap in private sector reduced and citizens in public sector saw a rise in their earnings. We recommend the following. Firstly, those with lower education and low-skilled should invest more in human capital. Provision of specific skill-based or life-long learning programs are essential. Secondly, more targeted measures to reduce the impact of COVID-19 on declining wages and salaries to specific group of people will bring them far. Finally, the younger and older workers appear to be more vulnerable. More skill development opportunities enable the younger participants to build human capital. For older workers, concrete income generation opportunities through entrepreneurial opportunities (private) or extending the age of retirement (public) are essential.