Psychological Capital as a Bridge Between Engaging Leadership and Psychological Well-Being: A Study of Low-Income Workers in Malaysia

Abstract

Mental health issues have seen a significant rise globally, with Malaysia exhibiting the highest percentage of mental disorders in Southeast Asia. Particularly in low-income areas, employees believe that skilled, capable, and committed leaders are their most important organizational resource for enhancing their psychological health. Therefore, this study aims to examine the effects of engaging leadership, psychological capital, and psychological well-being among low-income workers in Malaysia. A total of 229 sets of data were collected from the bottom 40% of households in Malaysia using judgmental sampling. The hypotheses were analyzed using Partial Least Squares-Structural Equation Modelling (PLS-SEM). The findings demonstrated that engaging leadership positively affects psychological capital, and psychological capital positively affects psychological well-being. Further, the role of psychological capital as a mediator in the relationship between engaging leadership and psychological well-being was confirmed. This study recommends that various stakeholders, organizations, and employees foster employee mental health by considering and leveraging the positive impacts associated with engaging leadership. The findings contribute to a better understanding of how to engage leadership in promoting psychological well-being, particularly among low-income workers in the Malaysian context.

Keywords

engaging leadership low-income worker psychological well-being psychological capital mental health

Introduction

The global trend of mental health issues such as depression, anxiety, and stress has been on the rise each year (Mahmud et al., 2023). Nearly 1 billion people are estimated to suffer from mental disorders, with Malaysia having the highest percentage of mental disorders among Southeast Asian countries (N. M. Ghazali et al., 2021). In Malaysia, depression has become a significant public health concern, with an estimated 23.9% to 57.8% of the urban poor population affected (Nasib et al., 2023). This high prevalence is largely attributed to factors such as low household income, financial insecurity, and the stigma associated with mental illnesses in the lives they survived. These growing mental health issues reflect not only individual problems but also wider societal impacts, particularly on psychological well-being (PWB). From a eudaimonic perspective, Tabala et al. (2024) explained that PWB is recognized as an individual’s perceived state of positive psychological functioning and self-fulfillment. This emphasizes the importance of achieving a fulfilling life that aligns with personal values and aspirations. In relation to the Sustainable Development Goals (SDGs), addressing mental health challenges is crucial to ensure healthy lives and promote well-being for all at all ages, as outlined in SDG 3 (Goodwin & Zaman, 2023). Particularly for low-income workers representing the bottom 40% of households by income, mental health issues can be grounded in financial stress, job insecurity, and work engagement experienced in their lives(Che Ahmat et al., 2023; Mansor et al., 2022). In Malaysia, the income levels are categorized into B40, M40, and T20. The B40 category represents the bottom 40% of households based on income, M40 represents the middle 40%, and T20 represents the top 20%, as shown in Table 1. As R. Ghazali et al. (2022) noted, economically, B40 households often rely on a single source of income, typically from low-paying jobs across various sectors. Socially, they face challenges such as low educational achievement and limited job-related skills, which further constrain their employment opportunities in the labor market. Beyond the facts, both urbanization and human capital are also represented as the root causes of income variation between and within states in Malaysia (Keshminder et al., 2021). More urbanized states or areas with highly skilled human capital tend to record higher income levels and increase the human capital skill sets among those living in the areas where the workplaces are located. These circumstances compound daily stressors and reduce coping capacities, thereby increasing susceptibility to mental health issues among low-income populations. Therefore, addressing mental health issues in this group is crucial for improving psychological well-being (PWB), especially considering the significant impact that these factors have on day-to-day life.

Table 1.

Household Income Classification.

Household income classification	Explanation	Monthly household gross income
B40	Lower-income group	MYR 1–MYR 4,850
B40	Represents 40% of Malaysians	MYR 1–MYR 4,850
M40	Middle-income group	MYR 4,851–MYR 10,970
M40	Represents 40% of Malaysians	MYR 4,851–MYR 10,970
T20	Upper group	MYR 10,971 and above
T20	Represents the top 20% of Malaysians	MYR 10,971 and above

Source. Munisamy et al., 2022.

To mitigate these challenges, engaging leadership has emerged as a crucial factor in fostering a supportive work environment that promotes psychological well-being among employees. Rahmadani and Schaufeli (2022) defined engaging leadership as a leadership behavior that facilitates, strengthens, connects, and inspires employees, which aims to enhance their overall work engagement. This leadership approach can cultivate a workplace circumstance where employees feel valued and motivated, which is particularly important for those facing mental health challenges, especially low-income B40 workers. Kohnen et al. (2024) revealed that engaging leadership is closely associated with individual well-being, as it increases work engagement and helps reduce burnout. Employees can better satisfy their work-related basic needs through support by engaging leaders (Xue et al., 2022). For instance, the engaging leader can establish the necessary rapport with their co-workers to ensure that their needs are met, which may lead to developing a corporate culture where people feel valued. Apart from engaging leadership, personal psychological resources also need to be highlighted, strengthening an individual’s psychological protective factors or resources in dealing with change-demand stressors. Of these, one known as psychological capital (PsyCap) acknowledges an individual’s positive psychological state that includes self-efficacy, optimism and hope, and resilience (Chan & Abdul Halim, 2025). Bafei et al. (2023) mentioned that the traumatizing life conditions could be less influential on individuals with high levels of psychological capital. This is because individuals with high PsyCap are more likely to perceive challenges as developmental gains rather than threats, thus enabling them to sustain better psychological health even in the face of adversity.

Despite the increased interest in this prevalent mental health issue, research integrating engaging leadership, which focuses on facilitating, strengthening, connecting, and inspiring employees with psychological capital, remains scarce, especially among low-income employees. Previous studies have been mainly focused on transformational leadership, which emphasizes inspiring followers by aligning organizational goals with their personal values and encouraging them to exceed expectations (Abolnasser et al., 2023; Das & Pattanayak, 2023); servant leadership, which seeks to involve others in decision-making and is strongly based on ethical and caring behavior within the team (Nawaz et al., 2024; Song et al., 2024); and ethical leadership, which focuses on the leader trying to follow normatively appropriate conduct in his actions (Huang et al., 2021; Sarwar et al., 2020) on the individual’s overall well-being. These findings highlight the need to investigate the relationship between engaging leadership and psychological capital on psychological well-being, particularly among low-income workers. Aligned with Schaufeli (2021), future studies should explore the integration of engaging leadership across various work situations, occupations, and countries to generalize the findings, particularly for low-income workers. Similar to Salas-Vallina et al. (2021), future studies should explore the effects of engaging leadership on employees’ well-being to identify the specific role of leadership in enhancing mental health outcomes. This recommendation not only addresses the literature gaps identified in the existing literature but also highlights the potential for engaging leadership and psychological resources to mitigate the negative impacts of stressful work environments, thereby enhancing their overall well-being. In parallel to Farid et al. (2021), future studies are suggested to explore the role of PsyCap as a mediating factor between various factors, such as engaging leadership and employee well-being, which could offer deeper insights. Consequently, this study aims to investigate the effect of engaging leadership on psychological well-being through psychological capital as a mediator role among low-income workers in Malaysia. The detailed research objectives are summarized as below:

To investigate the positive effect of engaging leadership on psychological capital among low-income workers in Malaysia.

To investigate the positive effect of psychological capital on psychological well-being among low-income workers in Malaysia.

To investigate the mediating effect of psychological capital between engaging leadership and psychological well-being among Malaysia’s low-income workers.

Underpinned Theory

Social sciences and management literature emphasize that leadership behavior is pivotal in shaping employee well-being across various organizational settings (Kaluza et al., 2021; Tawfik et al., 2023; Wen et al., 2025). While this relationship has been broadly studied, there is limited focus on the well-being of low-income workers, a group often at higher risk of economic hardship and related psychological stress. Supporting the United Nations Sustainable Development Goals (SDGs), particularly the aim to reduce inequalities and foster economic inclusion, recent calls in the literature suggest that addressing the needs of low-income employees is critical (Fujimoto & Uddin, 2021). This study addressed the psychological needs of low-income workers by focusing on how engaging leadership can provide the psychological resources that this group needs to thrive in their working environment. Unlike other leadership styles, engaging leadership places a greater emphasis on building strong emotional connections with employees, fostering a sense of belonging and purpose in the workplace (Rahmadani & Schaufeli, 2022). This connection is vital for all employees, but especially for those with low incomes. Engaging leaders is good for providing an emotionally supportive workplace, which enables employees to feel valued and empowered (Mazzetti & Schaufeli, 2022). Thus, engaging leadership significantly enhances the psychological needs of low-income workers. In line with the motivational process of the Job Demands-Resources (JD-R) model, this study employed the JD-R model to evaluate the relationship between engaging leadership and psychological well-being among low-income workers in Malaysia, taking into account the presence of psychological capital. More specifically, the JD-R model differentiates the job demands and job resources into two different types of job characteristics. Bakker and De Vries (2021) defined job demands as the aspects that need to be accomplished regardless of physiological or psychological costs, especially if the job requires high effort. This may lead to exhausting employees’ mental resources, which can directly result in energy depletion and health issues. Job resources are the motivational factor that improves job performance and activates employees’ positive behavior, ultimately improving their mental health (Thapa et al., 2022).

Engaging leadership serves as a vital job resource that can boost employee morale by providing support, feedback, and opportunities for growth. Leaders who possess engaging leadership behavior can help reduce the adverse effects of job demands (such as job burnout or stress) by enhancing job resources. Psychological capital (PsyCap) serves as a personal resource, where the individual’s positive psychological state is characterized by self-efficacy, hope, optimism, and resilience (Fu & Charoensukmongkol, 2022). Furthermore, PsyCap also contributes significantly to employees’ well-being and job performance, acting as a buffer against the detrimental effects of high job demands. Both components can foster a positive work environment, where employees are better equipped to navigate workplace challenges (Kumar et al., 2022). This synergy justified the mediation pathway, wherein engaging leadership fosters the development of PsyCap, which in turn improves employees’ well-being and performance. The rationale for selecting engaging leadership over other leadership styles primarily lies in its stronger focus on emotional engagement when compared with transformational and servant leadership. Transformational leadership mainly motivates employees through the shared goal, rather than addressing individual psychological needs (Abolnasser et al., 2023). Similarly, servant leadership, even though it is more supportive, does not emphasize emotional concern and support as engaging leadership does (Song et al., 2024). Through empathy and personalized support, engaging leadership better meets the psychological needs of low-income workers. In past studies by Xerri et al. (2023) and Chiracu et al. (2023), PsyCap has been shown to have a positive impact on employee outcomes, including job satisfaction, life quality, and well-being. It helps employees cope with stress and adapt to job demands, making it an important resource for low-income workers. Therefore, integrating PsyCap into the JD-R model not only highlights the mediator role but also serves as a valuable psychological resource that can enhance individual well-being. This integrated research framework (Figure 1) provides practical insights into how organizations can leverage both engaging leadership and PsyCap to foster psychological well-being among low-income workers, supporting the SDGs’ objectives of reducing inequality and promoting inclusion.

Figure 1.

Conceptual framework.

Hypothesis Development

This section will discuss the proposed research hypothesis accordingly. These hypotheses are designed to examine the direct effect of engaging leadership and psychological capital, as well as the mediating effect of psychological capital. This study aims to understand how engaging leadership plays a vital role in psychological well-being among low-income workers in Malaysia, primarily through the intervention effect of psychological capital. This study defines engaging leadership as a leadership style that emphasizes their follower’s connection, empowerment, and inspiration; it is hypothesized that it significantly affects employees’ psychological resources and mental health. In addition, PsyCap, which consists of four main elements: self-efficacy, optimism, hope, and resilience, is examined in this study as an outcome of engaging leadership and a mediator of well-being outcomes. Each hypothesis addresses a vital aspect of this leadership-well-being dynamic, constructing theoretical frameworks and empirical evidence to support the following proposed relationship.

Engaging Leadership Positively Affects Psychological Capital

In the study of Rahmadani and Schaufeli (2022), engaging leadership behavior significantly influences the improvement of psychological capital, such as recognizing employees’ strengths and promoting collaboration. These serve as personal psychological resources that help individuals manage stress and overcome workplace challenges. These resources enable employees to cope better with challenges and build a positive outlook on their work and personal lives. Creating a supportive work environment can positively influence engaging leadership on psychological capital. Past studies have suggested that organizational leaders who constantly offer feedback, encourage autonomy, and inspire their employees can further foster self-efficacy. This can make the employees feel more competent and confident in handling various challenges (Khan et al., 2025). Moreover, employee empowerment can foster optimism and hope as employees perceive the opportunities for growth and advancement within their working roles. In addition, providing employees with the support needed to recover from setbacks can help to bolster resilience through engaging leadership.

This is consistent with the study of Rahmadani and Schaufeli (2022), who found that recognizing employees’ strengths and fostering collaboration led to improved psychological capital. It indicated that these groups of leaders play an important role in nurturing positive psychological resources and encouraging the growth of a positive mindset. It is consistent with the findings of Bertieaux et al. (2024). The results identified psychological capital as a resource against negative work experiences, emphasizing the importance of leadership in cultivating these psychological resources. Thus, it was hypothesized that engaging leadership significantly positively influences the psychological capital among low-income workers in Malaysia.

H1: Engaging leadership positively affects psychological capital among low-income workers.

Psychological Capital Positively Affects the Psychological Well-Being

The relationship between psychological capital and psychological well-being is based on the idea that individuals with high PsyCap are better equipped to deal with stress and workplace challenges. Low-income employees constantly encounter financial instability and job insecurity, which limit career advancement opportunities. In this situation, PsyCap serves as a vital personal resource, comprising self-efficacy, optimism, hope, and resilience. More specifically, self-efficacy is defined as how individuals appraise their own ability to implement strategies to achieve particular goals successfully. It helps employees feel competent and in control, which contributes directly to their well-being (Rippon et al., 2024). In addition, optimism and hope provide a positive outlook on life, reducing the emotional toll of stress. Resilience enables workers to recover from setbacks without lasting psychological harm. Studies by Youssef and Luthans (2007) support that psychological capital directly influences well-being. They argued that individuals with high PsyCap experience more significant mental health benefits, such as a lower risk of burnout, because they view challenges as opportunities for growth rather than threats. In the context of low-income workers, where stress is more prevalent, PsyCap serves as a vital psychological shield.

It was also consistently shown in the past studies of Tabala et al. (2024) and Bafei et al. (2023) that there is a positive correlation between psychological capital and well-being. It indicated that respondents with higher PsyCap tended to report lower levels of negative emotions, such as anxiety, depression, etc. This gives the respondents a better ability to handle the psychological challenges associated with their low-income work environment. The study proposed that higher levels of PsyCap will result in better psychological well-being, characterized by greater life satisfaction, emotional stability, and a sense of purpose. This hypothesis is grounded in the Job Demands-Resources (JD-R) model, which indicates that a personal resource like PsyCap can stimulate against job demands and improve mental health outcomes. Thus, this study proposes that psychological capital will positively influence psychological well-being among low-income workers in Malaysia.

H2: Psychological capital positively affects psychological well-being among low-income workers.

Mediation Influence of Psychological Capital on the Relationship Between Engaging Leadership and Psychological Well-Being

Past studies (e.g., Farid et al., 2021; Schaufeli, 2021) have indicated that psychological capital serves as an important intermediary between leadership and employee outcomes, such as engaging leadership, strengthening employees’ PsyCap, providing them with the tools to maintain their well-being even under high-anxiety conditions. The mental health of low-income workers is always compromised by financial instability and insecurity on the job, and this mediation effectis important. As evidenced by Thomson et al. (2022), people on low incomes are known to have poorer mental health and well-being than those who are wealthier. These results show that income variation probably impacts mental health, particularly where it moves individuals out of poverty. In addition, Abdul et al. (2023) found that a heightened level of job insecurity causes employees to be unclear about their future, especially among Malaysian precarious workers, thereby affecting their psychological well-being due to a lack of autonomy or resources to overcome such a situation. In the workplace, leadership can create an environment that fosters the development of psychological capital, enabling individuals to leverage these resources and ultimately leading to improved well-being. For instance, Clarence et al. (2021) found that psychological capital served as a mediating role between servant leadership and psychological well-being among school teachers in India. These results imply that servant leaders who are able to enhance their employees’ hope, resilience, optimism, and self-efficacy ultimately improve their mental health. Employees with higher psychological capital are more likely to hold positive attitudes, which enables them to cope with adversity effectively and thereby enhance their overall well-being.

Consistent with Maykrantz et al. (2021), self-leadership strategies can translate their employees into positive cognitive psychological capital resources, which, in turn, enhance coping self-efficacy and ultimately influence health behaviors. Beyond the leadership style mentioned above, engaging leadership plays a crucial role in improving well-being by fostering psychological capital. As highlighted by Kohnen et al. (2024), engaging leaders who can foster a favorable work environment for their team are not only beneficial for their work motivation but also for their work-related well-being. This aligns with the JD-R model, which suggests that personal resources mediate the relationship between job characteristics (leadership) and well-being outcomes. A previous study by Farid et al. (2021) found that psychological capital serves as a critical mediator between leadership and well-being, emphasizing the importance of developing these resources to enhance employees’ mental health. In addition, Schaufeli (2021) emphasized that engaging in leadership behaviors indirectly enhances employee well-being by improving psychological capital. This hypothesis suggests that the positive effects of engaging leadership on psychological well-being are mediated through psychological capital. In this mediating model, engaging leadership enhances psychological capital, improving psychological well-being. The hypothesis builds on the premise that leadership behaviors alone cannot directly impact well-being unless they foster the development of individual psychological resources. Thus, this study proposed that:

H3: Psychological capital mediates the relationship between engaging leadership and psychological well-being among low-income workers.

Methodology

Sample and Procedure

The study employed a cross-sectional design, and data were collected from low-income workers residing in five states with the highest proportion of households in the bottom 40% in Malaysia through a self-reported offline and online survey questionnaire. Before actual distribution, the questionnaire underwent a thorough content validation with two scholars and a pilot test with 30 workers from various working industries and low incomes. Suggestions were later adapted into the final version of the questionnaire. A judgmental sampling was employed, and data were collected from August to October 2024. A follow-up session was conducted in September 2024 for non-submission surveys. A total of 229 valid responses were collected. The sample size is considered large for analyzing a structural equation model (Kline, 2005). The respondents’ participation in this study was anonymous and voluntary, which allowed them to withdraw from the study at any time. In total, 121 were males, and 108 were females; 44.54% of all respondents earned RM3,170 to RM3,969 in their current jobs. All respondents in this study fall within the B40 household income group as defined by the Department of Statistics Malaysia (DOSM). Interestingly, of the 229 respondents, 214 possess tertiary education, with 105 respondents holding a bachelor’s degree. This phenomenon is consistent with Malaysia’s current labor market context, where many educated individuals remain in lower-income brackets due to underemployment or low-wage sectors (Hazwan, 2024; Suzalina, 2025), indicating the ability to cover basic living expenses, albeit with limitations on discretionary spending and luxury items (DOSM, 2024). The respondents’ profiles are summarized in Table 2.

Table 2.

Respondent Profiles.

Characteristics	Category	Frequency	Percentage (%)
Gender	Male	121	52.84
Gender	Female	108	47.16
Age	18–24	42	18.34
	25–34	61	26.64
	35–44	75	32.75
	45–54	40	17.47
	55–64	9	3.93
	>64	2	.87
Educational level	High school or equivalent	15	6.55
	Diploma or certificate	86	37.55
	Bachelor’s degree	105	45.85
	Master’s degree	21	9.18
	Doctorate degree	2	.87
Average household income	B1 (Less than RM2,499)	24	10.48
	B2 (RM2,500–RM3,169)	85	37.12
	B3 (RM3,170–RM3,969)	102	44.54
	B4 (RM3,970–RM4,849)	18	7.86

Source. Authors’ own creation.

Questionnaire Development

The three main constructs of the study consist of engaging leadership, psychological capital, and psychological well-being. Engaging leadership was assessed using a 12-item scale adapted from Schaufeli (2015b). It measures strengthening, connecting, empowering, and inspiring. Examples are “My supervisor promotes team spirit” and “My supervisor delegates tasks and responsibilities to team members.” The Cronbach’s alpha value was >.85. Psychological capital was measured with the 12-item psychological capital scale from Luthans et al. (2007). The scale measures optimism (e.g., I always look on the bright side of things regarding my job), self-efficacy (e.g., I feel confident when presenting information to a group of my company colleagues), resilience (e.g., I am capable of working independently when necessary in my company role), and hope (e.g., Currently, I view myself as successful in my company work). The Cronbach’s alpha value was >.66. Lastly, psychological well-being was evaluated using 18 items adapted from Ryff and Keyes (1995), covering six aspects: autonomy, environmental mastery, personal growth, positive relations with others, purpose in life, and self-acceptance. An example of the item is, “Life has been a continuous process of learning, changing, and growth.” Responses were measured using a five-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree).

Data Analysis

The proposed hypotheses have been tested using partial least square-structural equation modelling (PLS-SEM) and the SmartPLS 4 software (Chan et al., 2024; Ringle et al., 2024). To assess the path significance between the different model constructs within the structural model, SmartPLS with the bootstrap resampling method (5,000 samples) was employed, as recommended by Hair and Alamer (2022). Engaging leadership, psychological capital, and psychological well-being, conceptualized as second-order constructs, were analyzed using the hierarchical component approach. Following past literature in PLS analysis (Amin et al., 2016), this paper followed the repeated indicator approach to model the second-order constructs. The approach assigns all manifest variables of the first-order latent variables to the second-order latent variables (Thakur et al., 2024). No missing data was found, thereby reducing the issue of unrepresentativeness in the study population. Since the data for this study was collected via a self-reported questionnaire, there is a vulnerability to common method bias (CMB) within the data that could impact the study’s results (Man Seong et al., 2025). Hence, CMB was examined using Harman’s single-factor test. Our analysis revealed that the first factor accounted for only 37.347% of the variance (Table 3). This suggests that CMB is absent in the data (Podsakoff et al., 2024).

Table 3.

Harman’s Single Factor Analysis.

Factor	Initial eigenvalues			Extraction sums of squared loading
Factor	Total	% of Variance	Cumulative %	Total	% of Variance	Cumulative %
1	16.078	38.281	38.281	15.686	37.347	37.347
2	4.667	11.111	49.392
3	2.331	5.549	54.941
4	1.734	4.127	59.069
5	1.357	3.230	62.299

Source. Authors’ own creation.

Results

Assessing the Measurement Model

The descriptive statistics (Table 4) depict skewness and kurtosis values for all items in the measured constructs, which are within the range of ±3, thereby acceptable for indicating a normal distribution (Kline, 2013).

Table 4.

Descriptive Statistics.

Variable	Size (N)	Mean	SD	Excess kurtosis	Skewness
First-order construct
Autonomy	229	3.606	1.089	.413	−1.156
Connecting	229	3.921	1.002	1.713	−1.443
Empowering	229	3.858	1.094	1.460	−1.468
Environmental mastery	229	3.720	.990	1.255	−1.156
Inspiring	229	4.037	1.117	1.986	−1.602
Personal growth	229	3.800	1.062	.144	−.972
Purpose in life	229	3.796	1.098	1.811	−1.532
Positive relations	229	4.076	1.108	.774	−1.437
Hope	229	3.726	1.115	1.165	−1.447
Optimism	229	3.762	1.086	1.045	−1.281
Resilience	229	3.709	1.057	1.233	−1.351
Self-efficacy	229	3.719	1.052	1.558	−1.332
Strengthening	229	3.923	.980	2.700	−1.609
Self-acceptance	229	3.828	.940	1.933	−1.380
Second-order construct
Engaging leadership	229	3.935	.7341	2.482	−2.246
Psychological capital	229	3.729	.8110	.903	−1.750
Psychological well-being	229	3.805	.7657	2.286	−1.412

Source. Authors’ own creation.

All constructs were evaluated in a reflective constructs model. The essential assessments for the measurement model include latent variable internal consistency, convergent validity, and discriminant validity (Seow et al., 2025). Table 5 presents the first two assessments with Cronbach’s alpha and composite reliability being above .7, which are considered acceptable for internal consistency. Convergent validity was evaluated using the factor loadings and average variance extracted (AVE). The outer loadings exceeded the threshold value of .7 and ranged from .754 to .945, while their AVE was above the minimum of .5, thus indicating sufficient convergent validity.

Table 5.

Results of the Measurement Model.

First-order construct	Second-order construct	Items	Factor loading	Cronbach’s alpha	Composite reliability	AVE
Strengthening		STG1	.850	.800	.882	.714
		STG2	.878
		STG3	.805
Connecting		CNT1	.777	.744	.854	.662
		CNT2	.846
		CNT3	.816
Empowering		EPW1	.890	.847	.908	.766
		EPW2	.905
		EPW3	.829
Inspiring		IPG1	.827	.824	.895	.740
		IPG2	.892
		IPG3	.861
	Engaging Leadership	STG	.848	.842	.893	.677
		CNT	.865
		EPW	.781
		IPG	.794
Hope		HPE1	.897	.862	.916	.784
		HPE2	.883
		HPE3	.876
Self-efficacy		SEL1	.872	.843	.905	.761
		SEL2	.880
		SEL3	.866
Resilience		RES1	.868	.805	.884	.718
		RES2	.876
		RES3	.795
Optimism		OPT1	.888	.848	.907	.765
		OPT2	.878
		OPT3	.857
	Psychological capital	HPE	.882	.886	.909	.741
		SEL	.839
		RES	.896
		OPT	.829
Autonomy		AUT1	.863	.834	.900	.750
		AUT2	.880
		AUT3	.855
Environmental mastery		ENV1	.878	.802	.883	.716
		ENV2	.843
		ENV3	.815
Personal growth		PER1	.876	.854	.911	.774
		PER2	.889
		PER3	.873
Positive relations		POS1	.918	.918	.948	.859
		POS2	.945
		POS3	.917
Purpose in life		PUR1	.863	.834	.900	.750
		PUR2	.876
		PUR3	.858
Self-acceptance		SEF1	.847	.765	.864	.680
		SEF2	.811
		SEF3	.815
	Psychological well-being	AUT	.843	.912	.931	.692
		ENV	.819
		PER	.828
		POS	.823
		PUR	.916
		SEF	.754

Source. Authors’ own creation.

The last assessment used the Heterotrait–Monotrait (HTMT) ratio. Table 6 shows that the HTMT ratio confirmed each construct’s discriminant validity since all the values were less than .85 (Hair et al., 2022). Therefore, it indicates that the measurement model meets validity conditions.

Table 6.

Results of Heterotrait–Monotrait (HTMT) Ratio.

Constructs	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
First-order construct
1. Autonomy
2. Connecting	.403
3. Empowering	.539	.721
4. Environmental mastery	.799	.574	.515
5. Inspiring	.601	.706	.719	.598
6. Personal growth	.770	.580	.540	.779	.584
7. Purpose in life	.725	.543	.536	.761	.483	.729
8. Positive relations	.773	.567	.658	.760	.652	.775	.787
9. Hope	.433	.613	.427	.478	.505	.567	.582	.634
10. Optimism	.326	.462	.355	.249	.405	.220	.280	.268	.681
11. Resilience	.336	.604	.447	.319	.479	.398	.458	.515	.891	.789
12. Self-efficacy	.338	.463	.237	.280	.374	.282	.174	.312	.725	.848	.782
13. Strengthening	.337	.775	.610	.599	.632	.513	.537	.567	.658	.469	.643	.499
14. Self-acceptance	.712	.768	.616	.657	.669	.547	.569	.665	.631	.646	.643	.636	.704
Second-order construct
15. Engaging leadership
16. Psychological capital														.641
17. Psychological well-being														.780	.544

Source. Authors’ own creation.

Structural Model Evaluation

The model in Figure 2 comprises engaging leadership, psychological capital, and psychological well-being, and its parameters were estimated through structural equation modelling. Hypothesis 1 states that engaging leadership is positively associated with psychological capital. As shown in Figure 2, engaging leadership is indeed related positively to psychological capital. The standardized regression coefficient for psychological capital (β = .576, t-statistic = 9.541, p < .000) is positive and significant. Hence, Hypothesis 1 is supported. Hypothesis 2 predicts that psychological capital is positively related to psychological well-being. The standardized regression coefficient from psychological capital to psychological well-being is positive and significant (β = .532, t-statistic = 8.705, p < .000), as depicted in Figure 2. Therefore, Hypothesis 2 is supported. After assessing the direct effects, the mediating effect of psychological capital was examined. Hypothesis 3 predicts that the relationship between engaging leadership and psychological well-being is mediated by psychological capital. The results from the bootstrapping mediation analysis indicate that psychological capital mediates the relationship between engaging leadership and psychological well-being (β = .306, t-statistic = 5.132, p < .000), which supports H3. To assess the structural model’s predictive power, the adjusted R² was referred to. The coefficient shows that 33.1% of the variation in psychological capital is explained by engaging leadership, followed by psychological well-being, with a coefficient value of 28.3%.

Figure 2.

Structural model with standardized path coefficients and significance.

Lastly, the standardized root mean square residual (SRMR) was used to assess the model fit. The SRMR value for the research model in the study is .065, suggesting that the research model has a considerably good fit (Hu & Bentler, 1999).

Discussion

The sample was evenly distributed and representative of the larger population. This study acknowledged that both men and women experience challenges related to psychological well-being in their workplace; however, more men experienced more stress than women (WHO, 2024). This further highlights that the younger generations are the most stressed-out group in the workplace, who are between the ages of 25 and 44, and a lower stress is observed before and after this range (Muhammed Radzi & Rabindra, 2024; Ragu, 2024; The Edge Malaysia, 2020). With reference to Amri (2024) and Aziz (2024), the findings reveal that most individuals with an income between RM2,500 and RM3,969 tend to feel pressured with high stress and low wages. This could be due to lower wages, job insecurity, and demanding work conditions among low-income workers, which would affect their well-being. Additionally, Malaysia has been ranked as the second worst country in relation to work-life balance due to the imbalance of wage distribution between high- and low-income groups in the country. On the other hand, the high cost of living in areas such as Kuala Lumpur and Johor, coupled with a mismatch between salary and workload, leads to dissatisfaction and a stressful work environment, affecting both physical and mental health. Thus, this study is worthwhile to explore on the relationship between engaging leadership, psychological capital and psychological well-being as a holistic model.

From the results, the association between engaging leadership and psychological capital is significant, indicating H1 is supported, and this is consistent with past studies (Rahmadani & Schaufeli, 2022; Zhou et al., 2024). This could be attributed to the fact that most of the respondents prefer an engaging supervisor who can further support their psychological capital in the workplace. It reflects that personal motivations will result in building positive work outcomes. In the context of this study, the majority of low-income workers prefer their supervisor to actively provide encouragement and inspire the team, which in turn builds confidence among them in the department. Further to that, a supportive leader provides encouragement to the team to develop their talents through their creativity in order to build confidence within the department. Ultimately, this enhances workplace satisfaction. Additionally, this further explains the applicability of the JD-R model in explaining how low income workers manage stressful situations at work believing that they can overcome difficult times and challenges as opportunities for personal growth. It highlights the importance of handling work tasks with a positive mindset in achieving life development.

Furthermore, H2 is supported, as higher psychological capital translates into higher psychological well-being. This result is consistent with past literature that has associated psychological capital and psychological well-being (e.g., Tabala et al., 2024). Positive psychological capital that an individual can draw on would positively impact workers’ well-being. Findings from the study suggest that empowering low-income workers by allowing them to present their ideas during meetings can significantly enhance their satisfaction and lead to positive changes in their lives. Moreover, the psychological capital of workers is established when they are confident in presenting their ideas and involved in discussions about company initiatives, which will then help them gain new experiences and continuous learning in the workplace. This finding also implies that employees’ previous work experience can guide them in navigating difficult situations at work, thereby enhancing their confidence to make independent judgments based on their past experiences rather than relying on the opinions of others. In line with this, confident employees may contribute their ideas to their superiors as a way to gain experience, improve their performance at work and engage in a continuous learning process. This further concludes that low income workers with resilience may perceive themselves as having positive and close relationship with the other co-workers.

Last but not least, H3 hypothesizes the mediation effect of psychological capital between engaging leadership and psychological well-being among low-income workers. This finding is similar to several studies (Farid et al., 2021; Schaufeli, 2021). In this context, it is said that when workers have high psychological capital, it enhances supervisors’ leadership engagement and contributes to employees’ psychological well-being. As such, the collaboration and communication between employees enhance their confidence when presenting information within the department, thus indicating a process of learning and growth. The results of the study elucidate that the more inspiring the supervisor, the more optimistic the worker becomes in performing their jobs, which eventually contributes to positive personal growth. Furthermore, encouragement from the supervisor is important as it allows workers to use their strengths to perform tasks and work independently as a way to achieve the company’s goals. This will ultimately enable workers to feel satisfied with their own achievements. The JD-R model better explains the importance of supportive leadership among low income workers in which personal strengths are critically essential for sustaining and promoting healthier well-being.

Implications

This research enriches the literature on low-income workers by confirming the mediating role of psychological capital in bridging the gap between engaging leadership and psychological well-being. It provides a causal link to how engaging leadership serves as a key job resource that positively influences psychological capital and enhances psychological well-being, which can be explained by the JDR model. Our findings suggest that the perception of low-income workers of their supervisor inspires them to become successful employees in their workplace, which ultimately leads to a bigger leap in their lives. Psychological well-being among low-income workers is critically important in relation to mental health issues. Previous studies have focused on new employees’ affective commitment in the hotel industry, as well as on leadership styles and employee psychology (Luu, 2021; Zhou et al., 2024). This study contributes by exploring engaging leadership, psychological capital, and psychological well-being among low-income workers, and generally, the role of the leader plays a significant role in enhancing this relationship (Zhou et al., 2024). For example, a caring supervisor can enthuse the workers with his plan by pushing them to make big improvements and positive changes in their lives.

This study provides a theoretical view to explain the importance of engaging leadership (i.e., strengthening, connecting, empowering, and inspiring) and psychological capital (i.e., self-efficacy, optimism, hope, and resilience) in enhancing psychological well-being (i.e., autonomy, environmental mastery, personal growth, positive relations, purpose of life, and self-acceptance) among low-income workers in Malaysia. By fostering these elements, workers are able to plan and reflect on their achievements. Engaging leadership is crucial for low-income workers in this context, as it fulfils their needs for relatedness (i.e., connecting, inspiring, and strengthening) and competence (i.e., empowerment), thereby increasing their likelihood of being engaged and satisfied with their jobs. Engaging leadership is said to inspire, connect, strengthen, and encourage followers in the workplace (Schaufeli, 2015a, 2021). This study highlights the importance of these behaviors in enhancing individuals’ hope, resilience, self-efficacy, and optimistic behavior. Therefore, psychological capital also serves as a cognitive affective resource, which enables low-income workers to better utilize job resources, such as engaging leadership.

Drawing on the JD-R model perspective, this study contributes to the literature by applying an existing theory to a different phenomenon and level of analysis (Makadok et al., 2018). Specifically, it further explains the JD-R model as the existing theory by exploring how various aspects of the job affect employee well-being. This has been discussed in organizational psychology literature, particularly among employees and school teachers. This study advances the application of the JD-R model by focusing on low-income employees as one of its contributions of the study. Moreover, this study addresses a critical gap by examining employees in the context of Malaysia, where 40% of the workers in Malaysia belong to the low-income group. This is particularly crucial for academics to understand how job demands and characteristics influence satisfaction and well-being among lower-income groups. The findings are important not only to organizational effectiveness but also to the country’s overall economic performance.

The findings have implications for improving the decision-making of leaders within the organization. The trend toward mental issues is at the heart of the company. First, the role of supervisors or leaders is important in enhancing the social well-being of the employees. In the context of Malaysia, it is believed that the supervisor plays a critical role in developing, encouraging, recognizing, and inspiring talent in the workplace, where these actions foster self-efficacy and hope. Importantly, firms are to ensure that supervisors are fully equipped with relevant skills and experience in enhancing the psychological well-being of employees. Furthermore, firms are encouraged to have social activities for their employees, including fun-day activities, company trips, appreciation days, and mentor-mentee days, to further support their well-being. The findings of the study suggest that the company or department should organize activities, such as team dinners and team-building activities, to promote team spirit and collaboration among employees, strengthen relationships, and make workers feel appreciated.

Second, the company needs to identify outstanding workers who can handle complex tasks to increase their problem-solving skills, nurture their ability to manage difficult situations, and develop trust in their capacity to resolve issues. Additionally, when workers are able to work independently, they develop a sense of responsibility and satisfaction in their life, as well as become more optimistic about their future work. Third, the study highlights the importance of investing in leadership development program demonstrating the positive impact of engaging leadership on psychological capital and psychological well-being. The company should train supervisors to adopt engaging leadership behaviors, such as building strong interpersonal skills, recognizing individual strengths, resilience training, goal-setting strategies, and self-efficacy training, to improve the employees’ well-being. These trainings are relevant for low-income employees as the costs are slightly lower.

Fourth, this study provides insights to government agencies, offering an opportunity to implement enhancement and motivational training programs related to leadership, psychology, health and mental illness, coaching, people analytics, and organizational development ranging from low- to high-ranking employees. These programs aim to improve their knowledge in the field. Mental health issues such as anxiety, depression, and personality disorders can negatively impact employees and the overall performance of a company. Therefore, enhancement and motivational training are essential to increase knowledge and awareness for mitigating these issues. With the help of such training, supervisors will be better equipped to actively engage with their team members, navigate challenging situations, and foster positive improvements within their teams.

Fifth, this study may highlight the potential joint collaboration between the companies and government as an effort to enhance employee well-being. Results indicate that majority of the employees are aged between 25 to 44, with a salary range between RM2,500 to RM3,969. Typically, this group is in a transitional life stage, moving from being single to married, which may indirectly affect their emotional and psychological well-being. Therefore, the collaboration between the public and private sectors may play a crucial role in providing support to the low-income workers. As such, organizing a national mental health awareness week in the workplace normalizes the discussion about mental health by showing them many employees are sharing similar issues. Additionally, a 3-day mental health workshop with a certification program may empower employees with knowledge and strategies related to well-being.

Limitations and Directions for Future Research

This study, like any other research, has its own set of limitations. First, one limitation is that the data were collected solely in Malaysia. This is because Malaysia has its own socio-economic factors that may influence the relationship between engaging leadership, psychological capital, and psychological well-being. Further research could explore the psychological well-being of low-income employees in other countries and further extend the sample to high-income employees. This is due to different cultural, economic, social, and organizational factors across different countries. This would allow the researcher to have valuable insights in performing a comparative analysis between these two groups. Additionally, future researchers are able to determine whether both low- and high-income groups share a similar leadership style in the workplace or vice versa. Second, this study was conducted using quantitative research, with data collected at a single point in time. This may limit the ability for researchers to draw a conclusion about the psychological constructs over time. Hence, future studies are recommended to conduct comprehensive qualitative research on the perceptions and experiences of low-income workers in Malaysia. This includes in-depth interviews or focus group discussions to understand the experience of low-income workers. Such an approach could provide a holistic view of low-income workers and offer insights into how relevant policymakers can enhance current company and government policies to promote social sustainability.

With this, there is an opportunity for future researchers to collaborate with government agencies to examine how training and development programs can be tailored to promote social well-being, particularly for low-income workers. Thirdly, the selection of respondents depends on the researchers’ judgment, which may lead to subjectivity, as the sample may over-represent certain characteristics. Future studies should adopt mixed sampling methods to ensure a more representative sample. In addition, data were collected among low-income workers in Malaysia, and psychological well-being was self-evaluated and perceptions were based. Future studies many validate the findings by employing multigroup analysis involving both employees and their superiors to obtain more accurate and comprehensive data related to employee well-being. By employing multigroup analysis, academics and practitioners may gather valuable information on factors related to well-being and suggest comprehensive strategies to address mental health issues faced by employees.

Footnotes

Acknowledgements

The authors are grateful for the help from the university, respondents who participated in this study, and the editors and reviewers of SSM—Population Health.

ORCID iDs

Chi Hau Tan

Pei Yew Mah

Ling Meng Chan

Man Seong Chan

Ethical Considerations

The study was conducted with due regard for participants' rights, privacy, and confidentiality. All data were anonymized to prevent the identification of individual participants and were securely stored to safeguard information confidentiality. The collected data were used exclusively for research purposes and were accessible only to the researchers.

Consent to Participate

Prior to participation, all respondents were provided with detailed information about the purpose and procedures of the study. Written informed consent was obtained from each participant. Participation was entirely voluntary, and participants were informed of their right to withdraw from the study at any stage without penalty or negative consequences.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Data Availability Statement

The data supporting this study’s findings are available on request from the corresponding author. However, due to privacy or ethical restrictions, the data are not publicly available.*

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