Can minimum wage act attract more local talent for low-paying jobs?

  • Business
  • Saturday, 10 Sep 2011

Guntur, 39, is an Indonesian national who toils six days a week from 8am to 7pm at a saw mill factory in Kuala Selangor earning RM800 a month.

He has a wife and three children back in Jakarta and sends half of his monthly wages back home every month.

The remainder of his salary is just enough to make ends meet, says Guntur, who, with four other Indonesians, rent a small room at a nearby shophouse and shares the monthly expenses and bills.

“We share whatever we can because money is very tight,” he says. When Guntur came to Malaysia and landed the job at the saw mill, his employer promised to pay him a monthly salary of RM1,000 after six months.

“That was over a year ago,” Guntur says, adding that he's given up asking his employer for the raise.

“The few times I approached my boss, he'd shout profanities at me and say that if I wasn't happy, I could go somewhere else.

“I would apply for another job if I could, but it's quite difficult as such jobs are difficult to come by.”

Earlier this year, Malaysia took its first step in having a minimum wage for workers with the passing of the National Wages Consultative Council Bill in Parliament.

The Bill, which aims to set up a council to recommend the minimum wage for various sectors, regions and jobs, will also see employers slapped with a RM10,000 fine everytime they fail to fulfill the requirement.

Guntur says he has heard his co-workers talking about the possibilities of a minimum wage act coming into force but, like his colleagues, he is skeptical if it would take effect.

“We're all still in the dark about it, but most of us feel that with a minimum wage policy in place, it would mean better salaries for us but the question is whether our employers will be willing to comply with it.

“We fear that some of us may just end up getting fired as it would be too costly for our employer to pay all of us a new (and higher) salary.

Guntur is convinced that if he is not fired, his boss would probably “go around” the act and maintain his original salary.

“I feel that it is up to the Malaysian government to take responsibility and ensure workers are paid at least the minimum wage,” he says.

Magnet for migrant workers

Official data shows that Malaysia attracts a huge number of migrant workers into the country. As of end-February last year, the total registered foreign workers stood at 1.8 million. The numbers have decreased from 1.9 million at the end of December 2009 due to the deporting exercise on illegals by the Government.

The assumption is that the implementation of a minimum wage act would mostly end up benefiting low-skilled foreign workers, as they are the ones occupying most of the low-end jobs in the country.

Human Resources Minister Datuk Dr S. Subramaniam concurs with this, although he adds that there are many Malaysians that take up these blue collar jobs as well.

“You can't ignore the fact that there are also many Malaysians occupying low-end jobs here. Our desire is to help these Malaysians.”

Subramaniam quotes the local manufacturing sector as an example, a segment that attracts both local and foreign low-skilled workers.

“It works both ways actually. Take the manufacturing sector. You offer a monthly salary of RM500 Malaysians might not be attracted to work for you. He or she may move away from the industry, choose to stay at home or do something informal.

“So, we hope that by implementing a minimum wage, Malaysians would find it attractive to work for the sector. In the long run, we have to rationalise our management of foreign workers, and reduce their numbers here. Having a minimum wage act is a beginning of the process.”

Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan strongly believes that the implementation of a minimum wages act would not serve as a catalyst to attracting locals into low-paying jobs mostly taken up by foreign workers.

“If the Government thinks that by introducing minimum wages (that) it will attract local workers, it would be wishful thinking.

“Take a security guard job for example. Nobody wants their kids to be in that line because of the social stigma of the job, because people don't look up to it (the job) and with due respect to the workers, it's considered a bit demeaning.”

Shamsuddin says a large percentage of jobs in the security line was taken up by foreign workers.

“The Government has introduced a new minimum wage level for the security services, ranging from RM500 to RM700, depending on the situation, but what is the impact? Locals are not coming in droves to take up the job of security guards.”

Shamsuddin feels that to make jobs more attractive, especially for locals, there is a need to “re-brand” the job scope.

“Make it into a profession give them the necessary skills so that they can have a bigger role. For example, if they are safeguarding an apartment, empower them to be able to provide first aid assistance and perhaps even fire-fighting skills.

“This is so that if anything happens, they can be the first one to assist the residents there.”

Multi-skilled talents

Having multi-skilled talents for a job would make it more attractive and warrant a higher salary, says Shamsuddin.

“In developed countries like Britain and the United States, they (the security jobs) are not manned by foreigners but by locals because the job is a respected one. They are empowered (to have multiple skills).

“If you don't rebrand the job and just increase the pay, nobody is going to respect to the job.”

Another way to make these jobs appealing to locals is to certify the jobs, Shamsuddin suggests.

“You can ask any local factory worker after they've worked 30 years what kind of skills do they have? They will probably ask you back what do you mean?”

Shamsuddin says the only certification that such workers would have is either their PMR (Penilaian Menengah Rendah) or SPM (Sijil Pelajaran Malaysia), which are the national examinations taken by all third and fifth year secondary school students respectively.

“To me, the Government should quickly certify the skills of these workers. Of course in Malaysia, we have something called Sijil Kemahiran Malaysia (or Malaysian Skill Certificate). This is under the purview of the Human Resources Ministry but very few people have this certificate and it's not well recognised.

“Our local workers should be given multi-skilled abilities and their skills should be certified. With certification, then we can commensurate the wage level.”

Shamsuddin notes that certain jobs in Malaysia that may be low-paying are in fact well remunerated in other countries.

“In most developed countries, if you become a plumber, you get paid well. In Malaysia, (only) few professions are licensed, such as nurses, lawyers or accountants, for example.

“Why not give every job a value? Make it a profession so that people are proud to be part of it?”

Not just about the money

Even with a minimum wage act in place for the promise of a higher, if not better salary, the long hours and working conditions that come with the jobs usually taken on by the low-skilled foreign workers may be enough to discourage local talents.

Malaysian Indian Restaurant Owners Association president Datuk R. Ramalingam Pillai calls this segment of jobs the “3D” category, in that locals find it dirty, demeaning and dangerous.

“Youths these days want a comfortable environment where the atmosphere is air-conditioned. I'm a restaurateur but even my own children don't want to be in this line.”

Ramalingam feels that the Human Resources Ministry should come up with modules to attract local talents, especially school-leavers, for the low-skilled jobs usually taken up by foreign workers.

Muslim Wholesalers and Retailers Association executive secretary Kamal Musthaffa says this segment of low-paying, long-hour jobs taken on by foreign workers definitely won't appeal to locals, given the working conditions associated with it.

“For these type of jobs, we bring in people who can live off Maggi Mee for 30 days,” he says in jest.

“It's the type of jobs usually taken up by labourers and won't appeal to locals,” Kamal adds.

Malaysian Indian Hairdressing Saloon Owners Association president K. Kaviarasan says it's a misconception to say that barbers were underpaid, but adds that many locals find the salary unappealing.

“The salary of a barber ranges from RM1,300 to RM1,500, depending on experience,” he says, adding that a typical barber needs to work 12 hours a day and that this is considered too mundane for locals.

Being a third generation barber himself, Kaviarasan says there is a need to hire foreign workers as barbers as nobody wanted the job, not even his own children.

Says Shamsuddin: “It's natural upgrading. Like plantation workers, if the parent is in the plantation sector earning a low salary, they would want their children to be out of it (the sector).

“That's why in the plantation sector, for example, you have older workers rather than young ones.”

A common lament about hiring foreign workers is that they cannot communicate in either Bahasa Melayu or English, which can be annoying to customers and deter them from frequenting places such as shops and restaurants that hire foreigners.

However, many businesses are training their staff on communicating with their customers. Many foreign workers also learn to speak on the job.

Language isn't a problem

“Language isn't a problem. You have a lot of Bangladeshis and Nepalese who can speak better Bahasa Melayu than locals,” says Kamal.

He adds that if language is an issue, the foreign workers can be given jobs or be positioned in parts of the shop where communication with customers is either minimal or non-existent.

“They can be positioned at the back of the shops and don't have to work at the front end to interact with the customers,” he says.

On the implementation of a minimum wage act, Shamsuddin feels it would be better to teach a foreign worker how to become more marketable than just increase his or her salary.

“We should be giving the employee the fishing rod (and help them reel in more money), rather than just give them (more) fish or higher wages.”

He adds that employers can do their part by investing in new technology and automation to improve the competency of its workforce and ultimately, ascend the value chain.

“If you look at our airport, the trolleys are manned by able-bodied, young foreign workers. But if you go to the Suvarnabhumi (Bangkok International) airport, the trolleys are pushed by local women, with the simple help of machines.

”So simple technology can help people perform their jobs. Instead of foreign workers, the older workers can be deployed there so that at the end of the day, we fully utilise our own human resources.”

Shamsuddin says that to have Malaysia move up the value chain, Malaysia should find ways to improve productivity instead of increasing minimum wages.

“Malaysia's productivity is 3.8 times lower than that of Singapore. Of course, Singapore's wages are three times higher than Malaysia's, but in terms of unit cost, Singapore's is something like 20% lower than Malaysia, because of the productivity factor.

Costs and productivity

“So if we increase our costs and productivity remains the same, then our unit cost of production will be higher and this will have a negative impact on our competitiveness.”

Shamsuddin points out that Malaysia had already slipped down to 16th place on the Institute of Management Development 2011 World Competitive Rankings from 10th place last year.

He says that if Malaysia focused more on improving productivity, as opposed to increasing minimum wages, it would actually encourage more investors into the country.

“With minimum wages (as a focus), they may decide to wait and see how much of an impact it would have on their business and if it is affordable to set up operations in Malaysia.”

Related Stories: Safeguards for the working class Our industries have to restructure' Will minimum wage affect SMEs?

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