Wednesday, 18 August 2010

MTUC finally understands the need for Minimum wage

I have been trying hard to get workers to demand for minimum wages.
This article shows that hopefully they understand what is at stake
here. They must have asked some economists to make factual research
and comparisons. At least there is hope for Malaysia but time is
running out.

Home » News » Local » 'Minimum wage: Hard to convince bosses'
'Minimum wage: Hard to convince bosses'

August 18, 2010, Wednesday

KUCHING: Malaysian Trade Union Congress (MTUC) Sarawak said the
union's greatest task in its fight for minimum wage is convincing
employers that a minimum wage is in their economic interest in the
long run.
Andrew Lo

Andrew Lo

"So the first question is how to convince employers that a minimum
wage is in their economic interest in the long run and the second
question is to convince the government that it is in Malaysia's
economic interest to have a minimum wage," said MTUC Sarawak secretary
Andrew Lo.

Of late, there has been a growing debate on whether or not Malaysia
should introduce a minimum wage policy. The call for a minimum wage
has been on the ascendancy ever since MTUC first proposed a nationwide
minimum wage more than 12 years ago, when Tun Mahathir Mohamad was
Prime Minister.

Lo said, because of the undying objection by the business community
led by the Malaysian Employers Federation (MEF), the government at
that time rejected the idea of a nationwide minimum wage asserting
that it would lead to an increase in the cost of doing business and
thus would hurt Malaysian competitiveness.

"The business community convinced the government to adopt a market
friendly policy and that wage levels must be determined by market
forces. Recently, the consensus has somewhat shifted and the idea of a
minimum wage is not as pariah as it once was.

"Even Prime Minister Datuk Seri Najib Tun Razak has just stated that
business must embrace minimum wage as a business strategy and as an
opportunity to revitalise their businesses. Even employers' groups
such as the respected Federation of Malaysian Manufacturers (FMM) has
proposed a minimum wage model that is reasonable, workable and forward
looking," he added.

However, MEF has steadfastly declared that even if the world is to
come to an end, and we are born again, MEF will still strongly oppose
a minimum wage.

"Such strong objections from MEF are not at all surprising as MEF's
sole interest is the maximising of profits by its members. I will be
the first to accept that employers are in business to make money and
to generate profits. So whatever decision that employers make is built
on this premise.

"Minimum wage is not just a social tool to reduce poverty, it is a
fiscal tool to enhance economic growth and productivity improvements,
as the empirical evidence in countries that have minimum wage
structure has demonstrated," Lo said.

More than 90 per cent of countries worldwide have a minimum wage, he
pointed out.

"Our competitors in the 1980s namely Taiwan, South Korea and even Hong
Kong, the bastion of capitalism and free markets, have minimum wage
systems while in Singapore the head of the trade union movement is a
government minister and thus the country is able to formulate an
inclusive wage policy that has seen wage levels more than three times
higher than Malaysia and productivity growth that has outstripped us,"
he said.

These four countries that were on par with us in the 1980s, have
overtaken Malaysia, became high income nations and members of the
Organisation for Economic Cooperation and Development (OECD), while
the nation is stuck in the middle income trap, Lo claimed.

"Today we are competing with Thailand, Vietnam, Indonesia and
Philippines. All these countries also have minimum wage and if we
still stick to the archaic views expressed by MEF, we will be
overtaken by them soon," he said.

Essentially the debate on minimum wage hinges on workers wanting a
minimum wage as a means to increase wage levels to provide sufficient
purchasing power to enable a worker to have a basic standard of
living; employers reject it as an increased cost of doing business and
hurt competitiveness; the government's aim to develop the country into
a high-income nation and fully developed by 2020.

Wages should be determined by market forces, he stressed. The
empirical evidence has clearly pointed to the fact that wage levels in
Malaysia have been suppressed and lagged behind by all measures.

The World Bank has reported that wages in Malaysia has increased by
only 2.6 per cent per annum.

"That is below inflation. The proportion of wages as a portion of GDP
has also fallen," Lo claimed.

He said the recently concluded National Employment Returns (NER)
showed that 34 per cent of Malaysians earn less than RM700 which is
below the poverty line.

In Sabah and Sarawak, where the cost of living is much higher, the
figures are a dismal 63 per cent and 48 per cent, respectively. A
further 37 per cent nationwide earn between RM700 and RM1,500, he

For a country to be a developed nation in ten years' time, it is
alarming that 72 per cent of its workers earn less than RM1,500.

These statistics are collaborated by Employees Provident Fund's
figures, he pointed out.

The starting salary of an associate professor in our universities
today is the same as it was in 1975.

MEF's own figures presented to the government stated that the starting
pay of a doctorate holder is just RM2,370 a month and this may be one
of the reasons why the standards of our universities are dropping, he

A clerk (with diploma) in Malaysia earns RM1,131 while in Singapore he
is paid an equivalent of RM4,747.

About 15 years ago, the salary of a part-time worker at a fast food
restaurant was RM3.80 an hour but today in Sabah particularly, it is
just RM2.50 while the price of a burger has gone up from RM1.20 to
more than RM4 in the same period.

"What is disheartening is the government recently issued
recommendations for public servants to take part-time jobs to make
ends meet. So clearly market forces, as propagated by MEF, has not
worked," he pointed out.

There are two reasons for these, said Lo.

Market forces are controlled by business, and combined by the
government policy of stifling trade unions movement by segregating
trade unions, only three per cent of private sector workers are trade
union members and less than two per cent are covered by collective
agreements, he added.

MEF has a declared policy of challenging trade union membership and
recognition. While the number of trade unions has increased, most of
the unions are in-house unions with less than 100 members.

Malaysia is perhaps the only country in the world that makes it
extremely difficult for high-value and knowledgeable workers to work
here, but has welcome millions of low-wage and unskilled workers, he

"This has undoubtedly suppressed wages as Malaysian workers have to
compete for low wages," he stressed.

In an attempt to placate demand for a national legislated minimum
wage, the government in the past decade tried to introduce a sectoral
minimum wage by way of the Wages Council Act 1957, an archaic

The last sectoral minimum wage was implemented in 1972, and as evident
by the minimum wage for security guards, has not worked at all.

No comments: