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Nikkei Markets

Malaysia needs structural reforms to shrink income gap

Government eyes raising skills and boosting foreign investments in key sectors

Malaysian Prime Minister Mahathir Mohamad has raised the minimum wage to 1,100 ringgit per month since coming to power in 2018.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia, raring to break into the club of high-income nations, needs to unleash few structural reforms to lift local wages and shrink income inequality in an economy that has enjoyed near-full employment for years, policymakers and economists said.

For nearly two decades, Malaysia's unemployment rate has hovered around 3%, a reading economists consider as full employment. Compensation to employees, however, has stagnated at around 35% of gross domestic product, lagging that of regional rivals such as Singapore.

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