Tuesday, May 8, 2012

Are private sector minimum wages of RM900 and RM800 fair?

It's a done deal, let's move on.

We know that the setting of minimum salary of RM900 for Peninsula Malaysia and RM800 for East Malaysia and FT Labuan was met with some reluctance from many employers especially the small to medium businesses. It is understandable considering the risk of losing business on the part of the employers, and employment on the part of the employees.

Increased fixed overhead may force enterprises to scale down to achieve optimal efficiency and workers get retrenched in the process.

Our wish is that all of these companies have room - and can make room - for increasing production so that the inevitable increase in minimum salary can be absorbed less painfully. But not every business is as flexible and the prospect of winding up is a real possibility if no drastic measures are taken.

That said, I am all for a fixed minimum salary. In a way the Government had paved the way for (or rather forced) the private sector to revise wages of employees on the tail end.

But wait a minute, every employee is a salaried worker. When you revise salary, it should be across the board. It should involve every one of every rank, no matter the quantum of change.

Image by New Straits Times. The PM with the HR Minister during the announcement.

Do it across the board

For instance, prior to the minimum salary gazette, a General Worker earned RM600, an Operator earning RM1,000 , and a Supervisor on RM1,500. When the RM900 minimum salary is enforced the General Worker would be on a RM900 payroll, pretty close to what the Operator is taking home. Therefore he will want a raise too, and so will the Supervisor. There is a domino effect on the company financially as well as the morale of the workers.

So, yes, do it across the board. Not just the lower end of the salary structure. You may say that it is too much to implement and some may even say I am out of my mind!

We have to start somewhere, anywhere

Let's look at this from a slightly different perspective.

When I say across the board, I was referring to a thought of mine about starting it with the bigger corporations, especially government-linked companies (GLCs) and government-owned enterprises. In fact GLCs are the perfect private entities to start off with. These GLCs and government-owned companies run and operate just like other private companies, except for the fact that when they make profit they will give part of it to the government in the form of dividend. When they lose money, they face the risk of being dissolved.

There are many profit-making GLCs and large government-owned companies that contribute to the government coffers and these profits form part of the fund utilised in the recent public service salary revisions. Remember, in the last 5 years there were at least two significant salary revisions in the public sector.

It is only fair that the government make the first move and give 'suggestions' to the BOD of these GLCs to take the initiative to implement the minimum salary and revise the same across the board. Other large conglomerates and private companies can then take cue of that initiative.

TheGreenMechanics' two cents:

Give the partly-private employees what they deserve. Implement the minimum salary now and revise the other ranges of salary too. As for other privately owned companies, it is a good gesture to follow suit, having considered every other options.

Read the rest of the news:-

RM900 minimum wage for peninsula
TUESDAY, MAY 01, 2012 - The Malay Mail

PUTRAJAYA: The government has fixed the national minimum wage at RM900 for the private sector, ending months of speculation and debate over the quantum. Announcing this, last night, Prime Minister Datuk Seri Najib Razak said the new rate will be implemented six months from the date of gazette.

However, owners of micro-businesses and small enterprises will be given one year to comply.

“This is to help them sufficiently prepare for the overhaul in the wage structure,” he said at the Putrajaya International Convention Centre, yesterday.

The one-year period isn’t applicable to professional companies such as law firms and dental or medical clinics, although they have five or less employees. The collective decision, he said, was reached after discussions and reviews among representatives from the government, employers and employees, all of whom form the National Wage Consultative Council.

“The main factor behind the implementation of the minimum wage scheme is to ensure that private sector workers have a respectable quality of life,” he said.

The RM900 a month is equivalent to RM4.33 per hour. The minimum wage in Sabah, Sarawak and Labuan Federal Territory, meanwhile, is capped at RM800 a month or RM3.85 an hour.

The minimum wage, however, does not include those in domestic service such as maids and gardeners.

The wage structure was proposed after taking into account studies by the World Bank, which included such factors as the cost of living, poverty line index, median range, productivity and unemployment rate. In the last 10 years, average wages in Malaysia have seen an increase of only 2.6 per cent annually, and Malaysia lagged behind other countries that have set a minimum wage standard.

Close to 33 per cent of workers in the private sector are believed to be earning less than RM700 a month, which is below the poverty line. The plan has met with opposition from employers, citing fears that it could put 200,000 small businesses and four million jobs at risk.

The Malaysian Employers Federation in March called for the scheme to be introduced in stages to allow productivity to increase instead of creating a one-time shock to the market.



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