Malaysia to set minimum wage

Malaysia is currently gearing up for its own version of minimum wage. The National Wages Consultative Council Bill has already been passed since the middle of this year after a four-hour heated debate at parliament to make way for the implementation of minimum wage in the country.

According to the Human Resources Minister Datuk Dr S. Subramaniam, the council is currently working towards setting the figures as statutory minimum wages for the various jobs, sectors and regions in the country. These figures – determined “in the best interest of the country’s economy” – will be unveiled by year-end, following which employers would observe, or face a fine of RM10,000 for each worker they fail to pay according to the new legislation.

And with that, many working-class people will have good reasons to cheer as they will likely feel a tad richer by the end of the year, with their Christmas presents coming in the form of wage increases through a price floor set by the Government. Employers, on the other hand, though, will be more concerned.

By Subramaniam’s own admission, the decision to legislate minimum wage is a controversial one. Nevertheless, he says it is a necessary initiative to protect the welfare of the working class in the country whose pay has remained depressed for years.

“At present, nearly 30 percent of Malaysians are earning less than RM700 a month,” Subramaniam says, adding that there are also some sectors in the country paying their workers a meagre RM350 to RM400 a month.

Just compare that with the poverty line income of the country - RM720 for the peninsula, RM970 for Sabah and RM830 for Sarawak, which are calculated for a household of four to five people - amid the rising cost of living and one could perhaps understand why the Government is taking the step to intervene in the labour market.

“In my view, labour should not be seen as merely an input to production, but as a development goal. Workers’ welfare is therefore paramount in national policy decision-making, hence the desirability of a minimum wage policy,” says RAM Holdings Bhd group chief economist Dr Yeah Kim Leng.