Saturday, March 3, 2012

Private Sector Minimum Wage Set Below RM1,000

The inevitable has now been made known - the private sector is set to have minimum wage. While the public sector have seen at least a couple of wages reviews or changes in the salary scheme quite recently, employees of the private sector have not seen any light to the very question of minimum salary.

As the title suggests, minimum wage is set below RM1,000.00 and I will not blame you if you now begin to wonder. I myself am puzzled. Below RM1,000 can mean anything from a single Ringgit to RM999 although it would take a dumb to think about figures towards the low end.

Image: MalaysianInsider
Datuk S.Subramaniam: “There will be a minimum wage below RM1,000 as the minister has said before and the Cabinet has approved it.”

The Malaysian Insider online news reported today (Mar.3, 2012) that the Cabinet has agreed to set a minimum wage of below RM1,000 for the 3.2 million workers in the private sector, with a RM100 difference between states in the Malay peninsula and Sabah and Sarawak, sources say.

The Malaysian Insider understands that the Najib administration decided on a regional difference in wages rather than sectoral differences although some sectors will be excluded from the policy. Selangor under Pakatan Rakyat (PR) rule has set a minimum wage of RM1,500 as demanded by most unions but opposed by employers.

Read the full article here.

In Brief

If reading a lengthy article is not your cup of tea, the following table is the summary of what I understand from the report:

Who will be affected
3.2 million workers in the Private Sector
Minimum wage
Below RM1,000
RM100 difference between states in
Peninsula Malaysia and Sabah/Sarawak
Initial demand by most Unions
Selangor has set minimum salary at RM1,500
Current  average salary:-

Peninsula Malaysia
Estimated 33% of private sector workers
Earning less than RM700

My Personal Opinion

Some people say let the demand-and-supply determine the salary in the private sector. While partly agreeing to such subscription, it is also worth looking at the public sector over supply of staff. One can look at the ratio of public servant to total population in developed countries and it is not hard to see that Malaysia has a significantly higher ratio.

Similarly, productivity of labour, be it in the public or private sector, must increase with the increase in remuneration. Towards this end, have we seen any significant increase in production in the public sector (or GLC) after the recent salary scheme revision? That is the similar question when determining the minimum salary for the private sector.

We have seen reluctance on the part of the employers every time the workers ask for minimum wage. This brings about the general perception that Malaysian employers prefer to bring in foreign workers at the expense of the local workers. Foreign labours normally cost lesser to employ and thus employers maximise their profit that way. I hope this is wrong but it is what many perceive as happening.

What makes you think that given proper salaries, local will not take up the hard and tasking jobs currently dominated by foreigners? Plantation, construction, manufacturing (factories), to name a few. Make it a policy to first give the jobs to Malaysian and not to the cheap imported labour. It will cost higher but that's the only way for this country to become a high income nation in 2020. That is what the regulator (government) is there for - to ensure that the people get remunerated properly while seeing to it that employers are still making profit.

Lastly, when the minimum wage is implemented, wages revision must be carried out across the board. Workers in the lower rank would no doubt be affected (in a good way), but those in the higher ladders should benefit equally.

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