DOMINO EFFECT WORRY OVER MINIMUM

Domino effect worry over minimum wage

KUALA LUMPUR 1 May 2012: A minimum wage is something that has long been overdue in this country.

In fact, the human resources minister and his staff admit that they have been working on it for the past 12 years but things only started moving early last year with the setting up of the National Wages Consultative Council.

There is a significant percentage of low-income workers in Malaysia.

The National Employment Returns 2009 study conducted by the Human Resources Ministry shows that 33.8% of the private sector workers earned wages less than RM700 a month, well below the 2009 poverty line income of RM800 per month.

According to the World Bank report 2011, the slow growth of wages relative to labour productivity (2.6% in wage rate against the productivity rate of 6.7%) – shows the suppression of wages especially of those of low-skilled workers and inefficiencies in the labour market.

With a minimum wage in place, the utmost worry on most people's minds would be the impending domino effect on the prices of goods and services.

There may also be a backlash from employers who fear a squeeze on their profit margins.

There may also be reservations as to whether the country will be able to attract investors who may think twice now about coming here with the increased cost of labour.

More money in hand does not translate to more purchasing power if the government does not set controls to ensure that opportunists do not increase their prices indiscriminately.

The ministry says this would just be an immediate reaction and that prices would stabilise once supply meets demand. To avert an inflation, the Domestic Trade, Cooperatives and Consumerism Ministry must be pro-active and start monitoring prices of essential goods now.

Employers will also need help and advice on how to adjust their workers' wages.

The Human Resources Ministry has said it will go on a campaign to explain the minimum wage policy before it is implemented.

A special department called the Minimum Wage Department will be set up to deal with issues arising from its implementation.

Yes, this is good news for the employees but the government must realise that employers will now have to fork out much more and take in much less.

There must be a "win-win" situation – for employers and employees.

To ensure low income employees get paid a higher wage, and employers continue to make profit with minimum wage in place, ministry should ensure that the department is equipped with personnel well versed in acts which cater to employment and companies as well as industrial and labour courts' workings.

It is good that this policy is intended to not discriminate among sectors and to attract locals to jobs that might have been too low-paying before.

However, changing the mindset of locals to take up 3D (dirty, dangerous and difficult) jobs would be difficult.

At present, some employers exploit the situation by paying extremely low wages to foreign labour to do these jobs.

The relevant departments, such as Labour Department, have to be more creative to get locals to fill in for these jobs.

The Human Resources Ministry said there are many repercussions such as hefty fines should employers not implement minimum wage.

The International Trade and Industry Ministry will also have promote the country more aggressively on other levels, such as skilled workmanship and foreign-investment friendly government.

All said, this is a new policy and the people must not expect overnight miracles from the side of employers to immediately comply with it.

Zakiah Koya