Minimum Wage

Minimum Wage

Whenever a landmark policy is implemented, it will never satisfy all vested interests. There will always be someone ready to complain against any change in the status quo, but the importance of government policy is judged by what it achieves.

The national minimum wage is the first ever in Malaysia. This will benefit about 3.2 million low-income workers in Malaysia, by ensuring they receive a basic salary per month.

This is an historic and significant move toward a more modern Malaysia.

Prime Minister Datuk Seri Najib Razak announced the new minimum wage of RM900 per month (or RM4.33 per hour) for workers in Peninsula Malaysia, and RM800 per month (or RM3.85 an hour) for those in Sabah, Sarawak and the Labuan Federal Territory.

He said the minimum wage would cover workers in all sectors of the economy, except domestic staff such as maids and gardeners.

Yet the Opposition’s reaction has been surprisingly anti-worker. DAP secretary general Lim Guan Eng claimed the minimum wage “will not bring about a higher standard of living nor economic growth but may instead bring about inflation.”

His comments parrot the line taken by businesses. Some employers claimed the minimum wage would force some businesses to collapse and cause unemployment and inflation to soar.

Malaysian Employers’ Federation director Shamsuddin Bardan claimed 98 per cent of businesses are small and medium-sized, and would be hit by the new rates.

“The 900 ringgit level is too high for those in small towns and remote villages. It will be a challenge for them to implement. Similarly for Sabah and Sarawak, wages will rise by 40 to 90 per cent,” he said.

However, the Government has provided an implementation mechanism so that the minimum wage would not burden employers.

For instance, the policy would allow part of allowances or fix cash payments to be taken into account when calculating the wages.

The national minimum wage will come into effect in six months. As a concession to micro enterprises – businesses employing five workers or less – Najib said they had one year to implement the new wage structure.

“Sufficient time is given to allow employers to restructure their business operations as well as the workers’ salaries,” the Prime Minister pointed out.

“The government also allows a flexible implementation mechanism so that employers who are genuinely unable to implement the minimum wage policy can apply for an extension of the transition period,” he added.

Meanwhile, Pakatan Rakyat has appeared confused in its response. In the same speech where Guan Eng criticised the minimum wage policy, he also pledged to somehow implement a minimum wage of RM1,100 per month if the Opposition came to power!

How would that rate be received by Malaysian businesses, one wonders? The DAP’s formula would certainly lead to high inflation and adversely impact the economy.

In contrast, Najib pointed out that a balance was needed between workers’ rights and competitive costs for businesses.

“If the minimum wage is set at higher than RM900, this is expected to affect the economy, the labour market and the inflow of foreign investments.

“If this happens, the industry cannot operate properly and many workers will lose their jobs. The government cannot allow this to happen because it will be detrimental to the welfare of the workers as well as to the nation’s interest,” he said.

Pakatan compounded its illogical response by later claiming that it would use public funds to help employers weather the initial impact of the minimum wage.

They say public finances must “take a hit” to ensure a smooth transition to a higher income economy.

DAP strategist Liew Chin Tong demanded that public funds must be set aside to offer “financial assistance and tax rebates to aide small-medium industries and even big manufacturers, as well as services, to automate, move up the technological ladder.”

In short, they want a free ride.

Businesses already have a grace period of six months to meet the minimum wage structure, and one year for micro-enterprises.

It is time now for Malaysian businesses to wake up and become competitive, and stop relying on keeping labour costs low.

Najib said the Government hoped, within the next two or three years, to be able to bring the minimum wage rates in Sabah and Sarawak to the same level as that of the Peninsular Malaysia.

He stressed that the minimum wage would not remain static, and would be reviewed regularly, based on factors such as country’s productivity and competitiveness.

“The introduction of the minimum wage is a historic moment for Malaysia. The lowest-paid will now be guaranteed an income that lifts them out of poverty and helps ensure that they can meet the rising cost of living,” Najib said.

In carrying out its promise on implementing a minimum wage, the Government has balanced the needs of small employers to keep costs down with the larger need of workers to maintain a decent standard of living.

This landmark policy will therefore make a real difference to the lives of millions of hard-working Malaysians.