Friday, March 30, 2012

Are Malaysians Too Lazy To Deserve Minimum Wage?

Hantu Laut

Can employers be trusted to pay fair wages to their employees?

Malaysia's salary structure at the lower end of the spectrum is unfair and invidious.Employers can't be trusted to pay fair wages to their employees. That's why Malaysia needs to introduce a minimum wage legislation to compel employers to pay minimum basic pay for workers to enable them to sustain a decent life for them and their families.

The plantation,construction and manufacturing industries are making too much money for themselves at the expense of the Malaysian workers.Most companies in Malaysia have poor or non-existence incentive schemes where employees get share of the profits.

Malaysian employers may not be the worst in the world but are still below par compared to countries like Hong Kong, Singapore, Taiwan and South Korea. Significant portion of our GDP still come from the sweatshops, where bigger chunk of the labour market and low wages are concentrated.

The are two conflicting schools of thought about minimum wage.The proponents say that it increases the standard of living of workers, reduces poverty, and forces businesses to be more efficient, while the opponents of minimum wage say that if it is high enough to be effective, it increases unemployment, particularly among workers with very low productivity. Former Prime Minister Tun Mahathir Mohammad was against minimum wage.

The absence of minimum wage in Malaysia has shied away locals from menial jobs or those they consider below them and attracted swarms of cheap migrant workers to this country.Our low wage is low for Malaysians but not low for these migrant workers.The construction and plantation industries are the two biggest employers of migrant workers.Send just half of them back home and you would see the collapse of these two sectors.

In 2006 Indonesian workers remitted a whooping US$2.7 billion back to their home country.The figure did not include foreign workers of other nationalities.Malaysia has almost 2 million registered foreign workers and possibly close to the same figure illegal foreign workers who came in illegally into the country, making Malaysia the biggest importer of labor in Asia.

Malaysians do not realise that over US$6.0 billion left this country annually as foreign workers remittances.If allowed to continue, this anomaly will eventually make Malaysian workers fall into the hardcore poor category and raising the unemployment rate as locals refused to take up these types of low paying jobs.

According to World Bank estimates, global remittances totaled US$414 billion in 2009, of which US$316 billion went to developing countries that involved 192 million migrant workers.In the Asean region, Philippines is still the biggest recipient of overseas workers remittances which stood at 13% Inflow and 0% Outflow in 2007.

Among the Asian tigers only Singapore and Malaysia do not have minimum wage policy. While Singapore let market forces set the minimum wage, Malaysia still allow sweatshops, utilising cheap foreign labour and victims of human trafficking to exist, resulting in the country being placed on the US Congress TVPA Tier 2 Watch List on human trafficking.

With minimum wage and wage increase there must be corresponding increase in productivity, locals taking up jobs previously held by migrant workers and the reduction of outflow of remittances.

Without these goals in mind and achieving them successfully, minimum wage would be disastrous and one that would put Malaysia in much bigger trouble.

Unless, the government can assure the goals are met, minimum wage would create higher unemployment, higher inflation and even bigger cash outflow out of the country.

The eventualities would be even grimmer than now if locals still refused to take up the jobs and migrant workers continue to stay, thereby, increasing the outflow of cash remittances exponentially.

There is a high likelihood that the minimum wage may failed to spur the nation to higher economic progress, because secretly the government knew the bumiputras, which form major part of the employment market are lazy and the man who knew better is Tun Mahathir Mohammad, hence his objection to its implementation.


mekyam said...

dear hantulaut,

yesterday i posed a question at the blog of a msian economist [link:] about an aspect of the approach to the minimum wage proposal in msia that has niggling me. i'm sharing it here, plus the response i got from the economist.

my question:

i have a nagging question about this minimum wage proposal in malaysia. everywhere i read the proposed minimum wage is given as a monthly amount. why is that?

in the USA [where i live], minimum wage, whether set at the federal, state or city level, is based on an hourly amount. the very term wage is understood here as such. those drawing monthly of twice-monthly remunerations are considered salaried and are thus not covered by any of the minimum wage regulations.

the benefit i see of an hourly minimum wage is the flexibility it affords both the employers and the employees.

employers can limit either the number of employees or employee hours or both to match their budget. this would be especially helpful to small-businesses with limited operating cost or households who cannot afford to hire fulltime housemaids or simply want to hire them for specific chores only.

and wage earners have the choice of working as many hours and/or for as many employers as they want in order to meet the amount they need for their livelihood.

i wonder too if a minimum wage amount based on a per hour calculation will not come out more reasonable to all sides.

if the above shows a very simplistic view of this issue, it's because that's about my level of understanding for most things economics or financial. :)

much thanks for any explanation.

his response:


Quite simply, the reason it's based on monthly wages is because employment contracts in Malaysia are on a monthly basis (you'll have to ask a lawyer if this is a legal requirement). Even fast food workers are paid on a per month basis.

is it any wonder both sides of the fence don't trust each other to do the fair thing should minimum wage be imposed in msia? and in the meantime, foreign workers are profitting from all the feet-dragging.

Ariff Awang said...

I believe that market forces will apply most of the time when dealing with workers' wages and will vary depending on various types of jobs and industries and the skills and training required for the jobs. Government can control the minimum wages given by various actions such as: controlling the supply of foreign workers by reducing their numbers when the demand is high, paying higher wages for the lowest grade of government workers thereby setting the standard, training skill workers at government expense, setting pilot industries to exploit the latest technological advances, educating large numbers of engineers, scientists, managers to the highest level of tertiary education, setting up R&D in many areas of technology and so on and on. Higher wages can be achieved at the high-end industries . We will have to create competitive high-end industries and we must support the brightest and the best Malaysians to do this regardless of race and religion.