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Minimum Wages: It’s Still A Good Start

By Thursday May 10th, 2012 No Comments

KUALA LUMPUR, May 10 (Bernama) — The announcement on the implementation of minimum wages last week by Prime Minister Datuk Seri Najib Tun Razak is a very important milestone in Malaysia’s wage structure which would benefit hundreds of thousands of workers.

As he had pointed out, for the first time in Malaysian history, workers would soon be entitled to a minimum wage of RM800-RM900 a month, depending on their location, where it would largely affect over 33.8 per cent of workers who currently earn less than RM700 a month.

“In principle, I am clear that this is the right thing to do,” Najib said in his official blog Monday, adding that the minimum range was decided after considering several factors proposed by the World Bank such as cost of living, poverty line index and unemployment rate.

Many see it as a very good start as it will be reviewed every two years to account for any changes.

Despite some ongoing debates on the amount set, many said they understood Najib’s explanation that the government had to carefully consider the correct balance between guaranteeing workers a decent wage and encouraging employers to continue to hire workers.

The minimum wage that was set by the National Wages Consultative Council (NWCC), has all this while been demanded by many workers unions and activists, and it was only fair that they look at the positive side, now that they got their demand.

Member of Parliament for Kota Belud Datuk Abdul Rahman Dahlan said the minimum wage was not a magic wand that would solve all economic problems faced by the lower income group.

He said the government had other tools to help the lower income group, such as through billions of ringgit of subsidies, direct disbursement of cash and training courses to teach them new skills.

It would be misleading for workers to think that, or be misled into thinking that the minimum wage was meant to make the poor become high-income earners overnight as that was never the intention.

“The minimum wage is a floor benchmark in which salaries can’t go down below the amount decided by the government. Of course, employers can offer higher wages if they think employees deserve it, based on their qualification and skills,” he said in an article published by The Borneo Post.

Employees and their employers could have opposing views; afterall, it was part of the democratic process, but those in the lower income group should be grateful now that the minimum wage regulation was in place that would guarantee their minimum income and to many, meant quite a drastic increase in their take-home pay.

But, for most of the workers unions in Sabah and Sarawak, it was not so much on whether the minimum wages should be implemented, as the question they have in mind was, why it was capped at RM800 which some considered as “too low”.

Their argument was that the cost of living in Sabah and Sarawak was 15 to 25 per cent higher than elsewhere.

“While government employees have a regional allowance, private sector employees have none, and the wages for workers in the two states remain low.

“As an example, supermarket girls earn less than RM500, and workers at fast-food restaurants in one of the more popular malls in Kuching are paid just RM2.30 an hour, all below the poverty line of RM962,” said Sarawak MTUC president Mohamad Ibrahim Hamid.

He said it appeared that the rate set for Sarawak was lower, based on the argument that Sarawak employers have less ability to pay as compared to their counterparts in Peninsular Malaysia, while over the past two decades, wage increases in the state ran far behind the increase in productivity.

“So, it would be wrong to argue that we cannot set minimum wages too high because firms have been paying so low up to now,” he was quoted as saying by a local Sarawak newspaper.

However, the human resources ministry has explained that the differential in minimum wages between the peninsula and Sarawak, Sabah and Labuan, was based on detailed studies, including by the World Bank, with the rate being calculated based on economic factors and statistics.

The ministry said five criteria were used to determine minimum wages, including the income poverty line, wages mediator, the consumer price index, labour productivity and the rate of change of unemployment, as adopted by the formula – RM956.70 for Peninsular while Sabah and Labuan (RM771.58) and Sarawak (RM781.21).

If the rate for the minimum wage was set at RM900 for Sarawak, Sabah and Labuan, it was feared that employers, particularly small ones, would be faced with the problem of whether to continue to operate, or fold operations with employees losing their jobs eventually, it said.

The ministry also explained that the median salary for the Peninsular was RM1,134 compared with RM738 (Sarawak) and RM577 (Sabah and Labuan), and it was not fair to accuse the government of having failed workers in those two states.

Source : Bernama

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