Minimum wage review vital

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  • Friday, 25 Sep 2015

ON Labour Day 2012, Prime Minister Datuk Seri Najib Tun Razak announced that the private sector minimum wage would be RM900 per month for the peninsula and RM800 for Sarawak, Sabah and Labuan. It was a game-changer to transform the labour market as part of the Economic Transformation Programme to make Malaysia a high-income economy.

The announcement was the culmination of two years of hard work by the Human Resources Ministry, Minimum Wage Technical Committee, World Bank and National Wages Consultative Council (NWCC). I am proud to have been involved in this long-standing quest by workers in the country.

The figures were recommended by the NWCC after very tough deliberations amongst the stakeholders, especially employers and workers. While it was natural for parties to take their entrenched positions and to think of their own constituency, finally a consensus was achieved.

Despite doomsday prophecies by employers that tens of thousands of companies would go bankrupt and investors run away, the minimum wage was implemented without many hiccups.

The benefits to the nation’s workers are enormous, not just for the low-wage earners who see their wages rising from an average of RM400-RM500 a month to RM800 in Sabah and Sarawak and RM900 in the peninsula.

With higher purchasing power, the economy also improves as domestic demand increases. It has also spurred productivity growth as companies are more ready to invest in new technologies.

A glaring example is the use of iPads at food courts to take orders. This means that we do not need so many workers and helps to reduce reliance on foreign workers.

The level of non-compliance is also quite low, according to statistics by the Labour Department. This points to the fact that most employers can afford minimum wages. It also encourages them to make their operations more efficient.

It is indeed very regressive therefore that three years later, on Labour Day 2015 in Kuching, Najib dropped a bombshell that the country is still not ready to review (increase) the minimum wage.

This is contrary to the minimum wage law which stipulates that the rates must be reviewed at least once in two years. In accordance with the law, the NWCC (which consists of tripartite representatives of workers, employers and the government), has forwarded its recommendation for a review.

The NWCC has set up a monitoring committee and mechanism to study the implications and has recommended increasing the rates, especially with the increase in labour productivity. Further, the Goods and Services Tax (GST) has resulted in a huge increase in the cost of living.

This one-step-forward-two-steps-back is quite typical of our country’s transformation programme. At this rate we will never achieve our high-income nation – for everybody, may I remind – in five years’ time.

I must take to task the Minister of Human Resources who is from Sarawak. MTUC and various stakeholder organisations have complained that they cannot even get an appointment to see him.

It is therefore not surprising that the minimum wage has yet to be reviewed as it requires strong leadership from the Human Resources Ministry. The long and short of it?

Workers are now paying the price. The country’s transformation programme will suffer as well.

I urge the Prime Minister to announce the new rates as soon as possible. Please remember that employers need at least six months to adjust to the new rates.

So it is imperative to make the announcement as soon as possible, otherwise there will be further delay.

Studies have shown that minimum wage and higher wages lead to higher economic growth and more business for companies. It will not just offset cost of living increases but also spur the drive to increase productivity.

A higher minimum wage will benefit a reported over three million private sector employees. There has been no adverse impact on unemployment or investments.

Employees must also be ready to take on additional duties and be more efficient as it is expected that employers may reduce the number of workers.

This is ultimately the long-term aim of hopefully reducing foreign workers and so that Malaysians can have higher value jobs.

Andrew Lo is Sarawak Bank Employees Union CEO and secretary of Malaysian Trades Union Congress Sarawak division.

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