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.