Upskilling key for Gen Z to achieve financial stability - Experts
Minimum wage fails to keep pace with rising costs in Malaysia
SHAH ALAM - Malaysia's minimum wage presents a complex issue for Generation Z (Gen Z), impacting their financial stability, career paths, and overall economic well-being.
Experts are urging Gen Z to upskill themselves through various government initiatives, such as Technical and Vocational Education and Training (TVET), and private offerings to earn above the minimum wage.
The Wage Gap and Living Costs
Speaking to Sinar Daily, Universiti Malaya Deputy Dean of Research Professor Dr Izlin Ismail highlighted the financial disparity within Gen Z, noting that there are different groups within this generation—those who are income taxpayers and those who are not, the latter typically earning minimum wage.
This divide is exacerbated by the rising cost of living, which the latest Belanjawanku report confirms is especially burdensome in urban areas.
"Minimum wage is definitely insufficient," Izlin said, advocating for a living wage to ensure a decent standard of living for all workers.
The current minimum wage in Malaysia stands at RM1,500, yet the estimated cost of living is approximately RM2,700 per individual.
Economist Dr Kuperan Viswanathan clarified that the minimum wage should be at least RM2,700 to cover basic living expenses.
He added that while this adjustment is necessary, it is unlikely to negatively impact employment rates given Malaysia's low unemployment rate of around three per ent.
Upskilling and Financial Savvy: Tools for Success
Izlin stressed the importance of upskilling for Gen Z to transcend the constraints of minimum wage.
"Gen Z should take up opportunities to upskill themselves through various government initiatives such as TVET and private offerings like microcredentials," she advised.
According to her, these programmes can significantly enhance earning potential and job security.
For Gen Z taxpayers, Izlin said leveraging lifestyle deductions and tax benefits is crucial.
"They should take advantage of deductions for sports equipment, digital devices, health screenings, and additional deductions for those with young families or aged parents," she suggested.
Although the overall tax burden may be low due to lower income brackets, Izlin said any potential tax refunds should be saved rather than spent frivolously.
Fuel Subsidy Removal: A Looming Challenge
A looming concern is the anticipated removal of fuel subsidies, which both economists agree will lead to increased living costs.
"With the removal of diesel and later petrol subsidies, we will likely see a spike in supply-side inflation," warned Izlin.
This inflationary pressure will exacerbate the financial strain on Gen Z, necessitating alternative support mechanisms from the government.
On this, Kuperan said that any government policies that affect the cost of living can significantly impact Gen Z financially.
"Especially policies to remove fuel subsidies can increase the cost of living, and the government may have to use other transfer mechanisms to offset the rise in cost of living from the gains made from removing fuel subsidies.
"Food, rental, and transport subsidies that directly support target groups will be a better way of reducing the cost of living," he said.
A Dynamic Economic Landscape with Opportunities
Despite these challenges, Kuperan said Malaysia's economy shows positive growth, with a rate of approximately 4.2 per cent and an unemployment rate of 3.3 per cent.
He pointed out that in such a dynamic economic environment, employers are likely to offer wages above the minimum due to the low unemployment rate.
"This will help Gen Z workers secure wages that exceed the cost of living," he noted.
Moreover, as the most educated generation, Kuperan said Gen Z is increasingly discerning about their financial contributions to society.
"They are concerned about how much of their earnings go into paying taxes and how these taxes are utilized for national welfare," Kuperan said.
He also highlighted that Malaysia's tax system is relatively lenient, with a top personal income tax rate of 24 per cent for incomes between RM100,000 to RM250,000, which is lower than in some neighbouring countries.
