Wednesday, February 4, 2015

MALAYSIA:::A high-income nation with low-wage workers

The minimum wage was introduced by the Human Resources Ministry after it found out that about 34 percent of private sector employees earn less than RM700 per month, which is below the poverty line of RM800. A similar study in 2010 revealed that 48 percent of Malaysian employees earn less than RM1,000 per month.

This is the ground reality, but the Malaysian government wants the country to be a high-income nation by 2020. This situation prompted the government to implement the minimum wage to attain the high-income economy.       

The national minimum wages of RM900 in peninsula Malaysia and RM800 in Sabah and Sarawak introduced in January 2013 is up for review this year. In view of the increase in prices across the board last year and the imminent increase in price due to the implementation of the goods and services tax (GST), workers deserve an increase in minimum wages in 2015.

While the Malaysian Trades Union Congress (MTUC) wants an increase to RM1,200, the Malaysian Employers Federation wants the old wages to remain as it is. Media report says the government would propose an increase to RM1,000 to appease the employers.

Minimum wages are basic wages, excluding any allowances or other payments. But many employers like estate owners and factories have adjusted the salary scheme to include allowances and other payment to be part of minimum wages.

Weak labour laws and the government issuing Umno and BN cronies permits and licences to bring in foreign workers have made employers addicted to foreign workers, discouraging the transformation to automation, self-service and high-technology industries.

Foreign workers - estimated to number about 6 million, both legal and illegal - have suppressed and stagnated wages. The Malaysian government took the easy route of attracting foreign direct investments (FDIs) by offering low wages, unorganised work force and poorly skilled labour.

The elitist BN government has amended laws to curb workers from unionising and deprive them of their legal rights. Worker’s rights have deteriorated, with only 6.44 percent of the 12.4 million private workers being unionised members.  

Minister in the PM’s Department Abdul Wahid Omar says the government is looking into gradually increasing the ratio of wages to gross domestic product (GDP) from 33.6 percent to 40 percent in the long term.

The government lacks new thinking and political will on transformation into higher value chain. In other countries like Singapore, the wages to GDP ratio is about 43 percent, Taiwan 46.2 percent, South Korea about 43.7 percent, Norway 51.3 percent, Australia 48.7 percent and Japan 51.9 percent. While others have moved up, Malaysia remained stagnated in low wages by allowing Umno cronies to reap the profit by recruiting foreign workers in droves.

Workers short-changed by the gov’t

To quote a 2005 figure, for every ringgit earned in Malaysian employees get 28 sen, company 67 sen and the government 5 sen; unlike in Singapore where employees get 42 cents, company 47 cents and government 11 cents. Workers in Malaysia are short-changed by the government itself.

Unless it is redressed the vision of high income economy in 2020 will remain elusive. Malaysia needs more political will and creative ideas to implement policies that will bring about structural changes in policy implementation than mere slogan chanting and scoring political points.

Malaysian workers deserve the MTUC-proposed increase of RM1,200 minimum wage and employers have the capacity to pay the extra RM300. Extra spending by workers will help the economy too. It is low-wage earners who support the very government which keeps wages down. Malaysian workers are disorganised into race, religion and partisan politics, which is conveniently used by the ruling party to suppress wages. The ball is in the workers’ court.


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