AN ANALYSIS OF EARNING STAGNATION AMONG WORKERS IN THE MANUFACTURING INDUSTRY IN MALAYSIA: THE MEDIATING ROLE OF JUSTICE EVALUATION OF WAGE FAIRNESS (JEID)
DOI:
https://doi.org/10.46754/Keywords:
Wage stagnation, manufacturing industry, wage fairness, sustainability, MalaysiaAbstract
This study examined factors that contribute to wage stagnation among manufacturing employees in Malaysia, with particular attention to the mediating role of Justice Evaluation of Wage Fairness (JEID). Although labour productivity increased by 5.3% in 2019–2024, real wages in the industry declined by 1.9% over the same period, further intensifying the cost-of-living pressure. Thus, this quantitative research uses multiple linear regression and bootstrap mediation analysis based on primary data from 300 employees in the main manufacturing sub-sectors. Notably, constrained wage flexibility (b = 0.295, p = 0.003) and Justice Evaluation of Wage Fairness (JEID) (b = 0.329, p = 0.003) constitute key direct predictors of stagnant earnings. Most importantly, JEID mediates the correlation between wage flexibility and stagnation to some extent. Overall, the paper concludes that policy interventions should extend beyond minimum wage changes and incorporate flexible wage-setting policies and perceptions of distributive justice to achieve sustainable wage growth.
References
Acemoglu, D., & Autor, D. (2011). Skills, tasks and technologies: Implications for employment and earnings. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. 4, pp. 1043–1171). Elsevier. https://doi.org/10.1016/S0169-7218(11)02410-5
Autor, D., Dorn, D., Katz, L. F., Patterson, C., & Van Reenen, J. (2017). The fall of the labor share and the rise of superstar firms. The Quarterly Journal of Economics, 135(2), 645–709. https://doi.org/10.1093/qje/qjx004
Bank Negara Malaysia. (2022). Annual report 2022. https://www.bnm.gov.my/documents/20124/761714/ar2022_en_book.pdf
Department of Statistics Malaysia. (2023). Salaries & wages survey report, Malaysia, 2023. https://www.dosm.gov.my/
International Labour Organization. (2022). Global wage report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power. https://www.ilo.org/global/publications/books/WCMS_863836/lang--en/index.htm
Jasso, G. (1980). A new theory of distributive justice. American Sociological Review, 45(1), 3–32. https://doi.org/10.2307/2095239
Lee, K. E., & Idris, A. (2021). Wage stagnation and productivity in Malaysia: An empirical investigation. Journal of Southeast Asian Economics, 38(2), 145–162.
Mishel, L. (2018). Yes, manufacturing still provides a pay advantage, but staffing firm outsourcing is eroding it. Economic Policy Institute.
Rasiah, R. (2021). Industrialization and economic transformation in Malaysia. Routledge.
The Edge Malaysia. (2024, January 15). Productivity up but real wages down for Malaysian workers.
World Bank. (2022). Malaysia economic monitor: Expanding Malaysia’s digital frontier. https://openknowledge.worldbank.org/handle/10986/38260
Published
Issue
Section
License
Copyright (c) 2026 Universiti Malaysia Terengganu Journal of Undergraduate Research
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
