By P. Gunasegaram
While many appear to publicly support PM Anwar Ibrahim’s announcement of a wage increase of 7 to 15% for civil servants in the support, managerial and professional categories, many privately sneer and snigger at the move.
What? Such a bloated civil service, on top of inefficiency, corruption and incompetence. Why do they deserve a salary increment, they ask. But examining it coolly, and discarding the prejudiced image of the civil service we have, shows a different picture.
The salary adjustment will likely catalyse similar moves in the private sector, despite resistance from the Malaysian Employers Federation whose sole function appears to be to depress employee wages and always resist wage increases, including minimum wages, to benefit employers.
The last time civil servants got a salary adjustment was over 12 years ago. Isn’t it high time they are given one? Living costs have gone up so much. Are private sector workers the only ones whose wages should be reviewed periodically, every three years or so?
Government salaries are paid on a scale. Even competent workers – and there are many of them who work very hard – seldom get double increments, partly because of the large number of government workers. Moving from a scale to another is considered a promotion and not assured.
Most of the time, the vast majority get scale adjustments only. That means a 2-3% adjustment yearly, if it comes to that. It does not even keep up with price increases and denies them an opportunity to move up the income ladder in real terms. Truth is, this salary adjustment for civil servants is long overdue.
And where do so many Malaysians who should know better get the information that the civil service is bloated? Our country includes the armed forces, police, teachers and health service personnel as civil servants.
Exclude them (there are over 400,000 teachers alone), and the civil service population could drop precipitously, as I explained in this article. If a proper apples-to-apples comparison is made, the civil service is not bloated.
This is not to say that the civil service is super-efficient. There is much that can be done and improved and this has to come from the top and then percolate to all staff. That is something that Anwar should turn his focus on in future.
When people talk sweepingly about corruption, inefficiency, incompetence, discrimination etc in the civil service, they are talking broadly – such things are present everywhere but more so only in some branches of government.
It’s unfair to tar the entire civil service for that. Much of the civil service is not corrupt and does an honest day’s work for less than fair wages, settling for a revision every 12 years for some adjustments to be made.
Anwar’s move to increase civil service salaries may help spark similar moves in the private sector. Roughly, the country has some 17 million workers with the civil service employing just 1.7 million or only 10% of the workforce.
Reasonable and sustained wage adjustment must include the private sector, a huge portion of which has become extremely dependent on foreign imported labour estimated to be 4-6 million workers. Recognised legal migrant workers are around two million.
Over time, adjustments must include a plan to reduce such dependence or to regulate it strictly, ensuring that it does not descend into little less than slave labour as it does in many industries now.
The extent to which employers benefit from using labour is indicated by a statistic called labour share of gross domestic product or GDP, the sum of goods and services produced. This is a measure of wealth creation through GDP generation which goes to labour.
It is defined thus: “The labour share of gross domestic product (GDP) is the total compensation of employees given as a percent of GDP. It provides information about the relative share of output paid as compensation to employees, compared to the share paid to capital.”
Malaysia’s labour share was a paltry 32.4% in 2022 which means that the share to providers of capital or employers was 67.6%, more than twice labour’s share. This is particularly inequitable because the total number of capital providers are likely to be a small fraction of total employees.
The table below gives a comparison with some countries. Some things may distort figures – for instance, Malaysia’s high dependence on imported labour for key industries such as plantations, manufacturing and semiconductors. But Malaysia’s figure is still very low compared to others.
Labour’s Share of GDP (2022 or latest available)
| Country | Labour’s share of GDP (%) |
| Switzerland | 70.5 |
| Thailand | 64.0 |
| United States | 60.0 |
| United Kingdom | 59.0 |
| Indonesia | 58.3 |
| Philippines | 50.0 |
| Singapore | 43 |
| Malaysia | 32.4 |
Note that Malaysia’s share has actually declined from 35.2% in 2017 to 32.4% in 2022. However, under the Madani economic programme, the target is to increase this to 45% within a decade, which is still way too low in terms of the share with capital providers. Look at Switzerland’s 70.5% and the US’ 60% for instance and even Thailand’s 64% and Indonesia’s 58.3%.
Another important point to note from this is that providers of capital are getting too much share of GDP – too much of the profit of enterprises goes to employers rather than workers. So it may be necessary to induce employers to share more of their take with employees.
If employers take a lesser share, wage adjustments can be more rapid. Which is why Anwar’s move to increase civil service salaries should be welcomed by all who want a more equitable distribution of income between labour and capital, between employees and employers.
P Gunasegaram says wage reforms for civil servants are probably the best thing the Madani government has done so far – and it is a significant achievement.
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