Posted tagged ‘Minimum wages’

High income nation with low wages workers

January 30, 2015

Minimum wages was introduced by ministry of labor after they found out that about 34% of private sector employees earn less than RM700 per month which is below the poverty line of RM800. Similar study in 2010 revealed that 48% of Malaysian employees earn less than RM1000 per month. While this being the ground reality but the Malaysian government wants the country to be high income nation by 2020. This situation prompted the government to implement minimum wages to attain the high income economy.

The national minimum wages of RM900 in west 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 GST, workers deserve an increase in minimum wages in 2015. While the MTUC wants an increase to RM1200 the Malaysian employer federation wants the old wages to remain as it is. Media report says the government would propose an increase to RM1000 to appease the employers.

Minimum wages is 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 labor laws and government issuing Umno and BN cronies permits and licenses to bring in foreign workers has made employers addicted to foreign workers and discouraging the transformation to automation, self-service and high technology industries.

Foreign workers estimated to about 6 million both legal and illegal have suppressed and stagnated wages. Malaysian government took the easy route of attracting FDIs by offering low wages, unorganized work force and poorly skilled labor. The elitist BN government has amended laws to curb workers from unionizing and deprive them of their legal rights. Worker’s rights have deteriorated with only 6.44% of the 12.4 million private workers are unionized members.

Minister in PM’s office Datuk Seri Abdul Wahid Omar says government is looking into gradually increasing the ratio of wages to gross domestic product (GDP) from 33.6% to 40% in the long term. Government lacks new thinking and political will on transformation into higher value chain. In other countries like Singapore wages to GDP ratio is about 43%, Taiwan 46.2%, South Korea about 43.7%, Norway 51.3%, Australia 48.7% and japan 51.9%. 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.

To quote a 2005 figure, for every ringgit earned in Malaysian employees get 28 cents, company 67 cents and government 5 cents unlike in Singapore 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 RM1200 minimum wages 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 who keep wages down. Malaysian workers are disorganized unto race religion and partisan politics which is conveniently used by the ruling party to suppress wages. The ball is in workers court.

Allocation for cronies ok but increase in minimum wages cannot says BN youth

October 8, 2012

The BN Youth has criticized the RM1100 minimum wage policy announced in the Pakatan Rakyat’s shadow budget as “unrealistic”, warning that it may destroy the economy. Hulu Selangor MP P Kamalanathan said BN’s RM900 minimum wage policy was made after careful study by the National Wage Council and World Bank and not plucked out of the air. Labis MP Datuk Chua Tee Yong also criticised Pakatan’s minimum wage policy of RM1,100 per month which is RM200 more than the BN’s RM900.

If increasing 200 above the BN minimum wages to RM 1100 is scoffed as if it will destroy the economy, when will Malaysia achieve prime minister’s high income society? Does BN youth oppose prime minister’s high income economy model? We cannot suppress wages and achieve high income society. The above attitude of BN youth shows they don’t appreciate the contribution of workers and the worker’s difficulties to meet the ever increasing cost of living. It is said that 80% of Malaysian workers earn below RM3000 per month and Qualify for BRIM vouchers. Low wages are driving Malaysian youths to Singapore and overseas and attract workers of other countries. Malaysia urgently need to move up the value chain of business activity.

Pakatan rakyat MPs have commented that the lack of a minimum wage policy, the dependence on foreign unskilled labour, and the resulting inability to automate and move up the technological ladder were the key  contributing factors of a stagnated Malaysian economy since the 1990s. Already in Malaysia workers’ share of national income is only 28% while in most developed countries workers share between 40%-55% of national income. There is clearly a need to improve the workers’ share of national income.  70% of Malaysian work force is low skilled compared to Singapore’s 51%. This large presence of low skilled work force contributes to a dampening effect on wages.

BN youth has supported the increase in wages for civil servants, police force and teachers in every other budget. Why do they oppose the increase of RM200 in minimum wages for low paid 3.2 million workers in private sector whose wages had stagnated for decades? One study by ministry of human resource says that the average wage increase was only 2.6% per annum against a productivity increase of 6.7% implicating the suppression of wages. BN has agreed to implement the minimum wage policy after a world bank study about a third (1/3) of the workers living with a wage of about RM700, below the poverty line.

Private sector workers do not enjoy the same level of social security and retirement benefits as the civil service. Therefore these lower wage earners in private sector need a decent wages to provide for the family especially in major cities.

For BN youth to oppose a RM200 in minimum wages clearly shows that they care more for rich employers then lower salaried workers who are struggling to meet the rising cost of living. MTUC and other unions have been fighting for a decent living wages for private sector workers for many years. A RM 200 increase in minimum wages given to workers will be spent on goods and services which will intern stimulate the economy. Money put to workers hand will have multiplier effect which increases consumption.

Human Resource Ministry has spent billions retraining graduates by consultants and local educational institutions. Instead these monies can be channeled to upgrade the technology used in SMEs and sent youths for on the job or in-house training. BN government lack ingenious thinking to upgrade the technology and provide other fiscal incentives to move up the value chain ladder in SMEs. BN youth should encourage and remodel local education institutions to produce employable graduates with good soft skills. These deficiencies in government delivery system contribute to low skill and low wages.       

Budget 2013 has allocated funds 582 million for toll Operators concessionaires, 400 million for crony bailouts (1MDB), rescue GLCs which is seat for UMNO rent seekers amonging to 2772.s million, improve safety perception of police 272.5 million, 386 million to set up 57 KRIM stores at inflated prices. BN youth never protested against these allocations for rich cronies like how they protest for minimum wage increases to low income wage earners.

The Minimum Wages

May 4, 2012

The much delayed minimum wages was finally announced by the  PM, while the main stream media is still hotly debating the consequences of Bersih 3.0. The minimum wage for workers in Peninsular Malaysia has been set at RM900 a month while for Sarawak, Sabah and Labuan it is set at RM800 per month. The minimum wage would cover workers in all sectors of the economy, except for the domestic help services or maids, gardeners and similar employment categories. The minimum wage will take effect six months from the date the minimum wage order is gazetted. This seems to be a half-hearted plan that may not take off. The Selangor state government has implemented a minimum wage of RM1500 for state and state GLC employees, while the Penang state government has meanwhile set the minimum wage at RM1100.

The announcement comes after another sweetener was announced for workers before the 13th general election. It’s an election goody, and a knee jerk reaction, in response to the workers protest on 3rd November 2011 against the amendment to employment act 1955. The PM wants to win over the workers to support BN before the coming general elections. The debate on the acceptable level of minimum wages will go on for some time to come.

Our PM announced the 10th Malaysia plan in 2009, for Malaysia to become a high income nation by 2020.  It took another 3 years to announce a minimum wages plan. A minimum wage of RM900 will only attract more foreign workers. Malaysian workers cannot survive on such a wages. Foreign workers will displace the unskilled Malaysian workers in low paying jobs keeping Malaysian workers earning wages, below the poverty level. Wages alone are no longer a major determinant of competitiveness but in Malaysia it is deliberately kept low through large and unfettered recruitment of foreign workers by employers and crony agents through very exploitative production system. Foreign workers already form 40% of work force.

Workers rights have been eroded over the years under the BN regime. Labour laws have been amended to allow sub contractors to employ workers for hire in factories and officers. Forming in-house unions has become impossible. Existing unions are weakened systematically and  thus lowering job security. The close relationship between government and employers has bred corruption, kick backs, and big lucrative deals for the UMNO goons. The civil service policy makers and implementers are clueless on how to stimulate and reinvigorate the stagnating productivity and efficiency of the public sector. This is stifling the private sector growth and expansion. Institutionalized racism and corruption have hampered and blunted the drive for increased productivity and efficiency. Workers can be made more productive and efficient with more equality and meritocracy, within the system.

Millions of skilled and highly educated Malaysians have gone overseas seeking job opportunities. Our loss, has been other countries’ gain. UMNO/BN must dismantle the racial quotas and discrimination to increase efficiency and productivity. Structural transformation is compulsory and a prelude for socio-economic and political changes.  If, the slogan ‘Malaysia is truly Asia’ is to hold true, then the driving spirit of Nation building, should not just be a Ministry of Tourism’s slogan.

Senator S. Ramakrishnan

3/5/2012