A Fairer Wage Policy for Malaysia’s Working Poor in private sector

A Fairer Wage Policy for Malaysia’s Working Poor in private sector

Decades of subsidies have allowed employers to continue to suppress wages resulting in the constant decline in purchasing power of workers’ wages. About 40% of Malaysian households still earn less than RM1500 a month. Therefore, it is necessary for cheap labour to end!

The New Economic Model recognizes that Malaysia needs to invest in new technology, training and skills and innovation inorder to provide a high income economy and a higher standard of living. A flexible and fairer minimum wage policy is complementary to this and is a more direct way to force Malaysian firms to modernize and invest as the NEM advises.

Minimum wage of RM900 plus RM300 as a cost of living allowance.

High minimum wage level (60% of the average wage)

Likely to result in high rates of non-compliance and job losses

No flexibility for employers to deal with the varying market conditions specific to each sector

State Government for each state need to recommend a higher and fairer minimum wage than the basic rate set which will help to take in to account the varying costs of living in each state.

The aim of the minimum wage should be to allow low income workers especially in private sector to maintain a decent standard of living without unduly limiting the flexibility of employers to allow Malaysia to remain competitive at the global level.

It helps to improve the standard of living of the poorest working Malaysians who need it the most.

This fits with the NEM and the goal of a high income country with a high standard of living and quality of life.

Enforcing a minimum wage level is just another way of forcing firms to begin increasing their productivity and moving away from the reliance on cheap labour and perhaps an easier way than removing subsidies and price controls.

Increased motivation for employees to work harder as higher wages make them feel more valued or an increased work ethic as employers demand more return from the higher cost of employing workers.

Public sector workers are relatively well paid and have recently had a 35% increase in salary and a 100% increase in the cost of living allowance.

With higher wages many workers have been attracted to the public sector at a cost to the private sector which is losing out in both quality and quantity of workers.

It is vital to encourage workers back in to the private sector and a minimum wage is essential to do so.Implications: Aligns Private Sector Wages with Public Sector Wages

An increase in wages will increase people’s incomes. This will result in increased spending, generating demand for goods and services which will in turn increase demand for labour.

Higher incomes also result in higher saving which contributes to increased investment, as resources saved by individuals and deposited in banks can be lent to businesses for investment in capital.

Both higher spending and saving will lead to higher economic growth.

Malaysia is behind the international standard of having legislation or binding collective bargaining regarding minimum wages which 90% of countries currently have.

Although Malaysia has a minimum wage in a few sectors, it is a recognized fact that these minimum wages are insufficient to provide a decent standard of living and are rarely updated to be a significant policy.

A minimum wage is necessary for Malaysia to become the high income economy it aspires to.

Private sector workers are worst off than public sector workers and the impact will be hugh on Malaysian economy. The government has not initiated enough momentum to spur the increase in private sector wages. The government should have provided some form of relief to encourage the private sector to increase their pay.

The ammendemnet for mimium pay has been revoked at the 11th hour by the government and therfore NGO's should pressure the government to push for minimum wages immediately.

15/10/10