IN today’s fast-paced world, how many of us are actually willing to undertake unpaid work, or would not mind to accept a low-wage job amid skyrocketing living cost? While it is undeniable that there are still many altruistic souls in our society who selflessly help others on a humanitarian basis, but it is a fact that most employees are willing to toil and work tirelessly at average nine-to-five jobs for what they feel is valid remuneration for the work they do.
By definition, minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers or in its simplest term, it is the minimum amount of pay an employee should receive, according to government legislation.
Today, many developed countries in the world have some form of minimum wage and the implementation of minimum wage is often touted as a tool to reduce poverty and bridge the gap in income disparity, especially among low-income workers.
In Malaysia, we joined the league of countries implementing minimum wage in 2013. In the Budget 2011 speech in October 2010, Prime Minister Datuk Seri Najib Razak had announced the minimum wage initiative with the hope to create the necessary environment so that the productivity of employees can be improved and set in motion Malaysia’s aim to become a high income nation.
Before the implementation of minimum wage in 2011, it is found that 33.8% of private sector workers were paid below RM700 per month relative to the Poverty Line Wage (PGK) RM800, according to the Ministry of Human Resources in its National Employment Studies in 2009.
With the introduction of a national minimum wage according to the Malaysian Wages Order 2012, the lowest monthly rate for employees in Peninsula Malaysia is RM900 while in Sabah and Sarawak, the lowest monthly rate is RM800.
The Debate Over Minimum Wage In Malaysia
Although the minimum wage policy has been barely implemented for a couple of years, but calls to revise the minimum wage have resurfaced as the minimum wage is set for review every two years.
Malaysian Institute of Economic Research (MIER) executive director Dr Zakariah Abdul Rashid was quoted in a local news daily in January this year as stating that “based on the minimum wage policy, we need to do the review every two years.”
Taking the opportunity to get their viewpoint in ahead of time, in October last year, the Congress of Unions of Employees in the Public and Civil Services(Cuepacs) had publicly called for a revision of minimum wages of public servants to RM1,200 to help them cope with the rapidly spiralling cost of living.
The Malaysian Trades Union Congress (MTUC) also chipped in with their view that minimum wage to be raised to RM1,200 and standardised across the peninsula as well as Sabah and Sarawak, as reported by a local news daily in January this year.
Are employees justified in their demand which in this case comes to about a 30% increase? A recent World Bank study found that the percentage of wage increment in the country was flattening at 2.6% per year while productivity increased on average by 6.7% in the same period for the past ten years.
In light with the above, it is apparent that the salary increment is not in line with productivity gains and the cost of living and this clearly indicates there is distortion in the local labour market, where the increment of wages fails to complement with the rising cost of living.
Admittedly, Malaysia has moved ahead in comparison with many other neighbouring developing countries when it comes to a national minimum wage but we are still far behind some of our Asian neighbours such as Japan, Korea, and Singapore, among others.
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