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Minimum wage not the entire story

 | May 15, 2012

Bosses are not willing to pay because they have become so used for so long to not sharing the cake with workers.

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Judging from the howls of protest from employers in Sabah in particular, the minimum wage culture will take much more time, expense and explanation before it can filter down through society and the business community. Malaysian Employers Federation (MEF) executive director Shamsudin Baradan has also been quoted as saying: “If I were to be born again, I will never agree to a minimum wage.”

The Federation of Sabah Manufacturers (FSM), for one, is blowing hot and cold on the Minimum Wage Act and has predicted inflation and other dire consequences for workers, businesses and the economy. It claims that it was not consulted on the Act, a point which the Sabah MTUC disputes and cites FSM membership in the tripartite National Wage Consultative Council by way of proof.

The inflation theory has been demolished by the government as minimum wage does not involve creating or printing more money but doing justice to the third of the workforce in the country who get less than RM700 per month.

Alternatively, the FSM is demanding a longer grace period than the current 6 to 12 months promised by the government to comply with the Minimum Wage Act. The grace period begins from the time the Act is enforced. Between gazetting and enforcement, there could be delays, it was learnt.

Or, in yet another delaying tactic, the FSM pleads for exemption from the Minimum Wage Act in return for pledging to give 15% increment a year for three years in a row to their lower rung workers.

They seem to be getting the support of quite a number of ignorant politicians across the divide. Obviously, they don’t fear the wrath of the voters at the ballot box.

Employers are claiming that they would have to close shop if they have to fork out a minimum wage of RM800 monthly per worker. The FSM claims that apart from those in the minimum wage category, across the board increases would have to be made for the other categories.

If that’s really the case, so be it. The government needs to call their bluff.

Closing one eye

It’s not that employers are not able to pay the minimum wage. It’s more a case of them not being willing to pay because they have become so used for so long to not sharing the cake with workers, consumers, the community, the government and, indeed, their shareholders and investors. This explains their tendency to “criminally exploit the workforce even to the extent of condoning human trafficking and slave labour”. The government has for long been closing one eye to the situation, if not looking the other way. This won’t do.

It took the Australian and US governments, for example, to force Malaysia to implement the Anti- Trafficking in Persons Act and Anti-People Smuggling Act.

Putrajaya’s initial reaction to allegations that Malaysia was the hub of human trafficking and people smuggling in the region was extreme indignation and outright denial. The government did not hesitate to make the outrageous claim that the country had the best immigration system in the world besides being a paradise for workers.

Everybody, it seems, wanted to get to Malaysia to join its workforce, according to Putrajaya.

If businessmen close shop because of minimum wage, they would be the ones to lose the most. Their workers would move on elsewhere.

Perhaps, these employers should be reduced to joining the workforce themselves to “enjoy” minimum wage. That will quickly bring them back to the stark reality that making money is not the be-all and end-all of life.

Neither can the business of making money be allowed to be conducted almost like a criminal activity to the extent of hoarding the commodity and wealth. The collective and larger interest of society demands that making money be regulated and put in its proper perspective.

Alternatively, employers want the Minimum Wage Act to apply only to Malaysians and exclude the refugees, other foreigners and the stateless.

In that case, it defeats the purpose of introducing the Minimum Wage Act.

Economic dung-heap

It was the presence of foreign workers in Malaysia that, among others, brought about the Minimum Wage Act late in the day. These foreign workers are keeping our people at home, lolling in front of the TV set, because they can no longer afford to work at the rates which employers are willing – different from able – to pay.

On the surface, it appears that there should be no need for a Minimum Wage Act since the market is supposed to take care of everything through the forces of supply and demand.

However, this is generally only true for those above and therefore outside the minimum wage bracket. The Minimum Wage Act refers to only those at the bottom of the economic dung-heap. This covers not only our workers but foreigners, both legal and illegal, refugees, the stateless and part-time workers.

For those within the minimum wage bracket, globalisation has distorted the local supply and demand mechanism by encouraging the free flow of labour under the global village concept ushered in by the digital economy fostered by the IT revolution. Other factors of production like capital and enterprise similarly get free rein under globalisation.

The foreign worker denying our workers within our borders is not the only factor behind the Minimum Wage Act.

Also to be considered are workers within their own borders who are taking away jobs which should otherwise go to our workers but for the investments going their way. Free trade must also be about fair trade. If foreign countries steal our jobs by callously exploiting their workforce, we have a right to enforce sanctions on their goods entering our market. They cannot be allowed to get away scott-free by paying their workers less than what we pay ours.

Sanctions, needless to say, are not possible in the absence of a Minimum Wage Act.

Tough stand needed

In the immediate run, it’s feared that employers will hit back by denying their workers increments and bonuses to “get back” the extra that they have to fork out in minimum wage. Generally, annual increments for those on the lowest rung of the wage structure could be as little as RM50 or 10%.

If so, the government would have to step in earlier than anticipated to increase the minimum wage level from the current RM900 per month in Peninsular Malaysia and RM800 per month elsewhere. This would have to take into account the annual increments denied.

The minimum wage announced on May 1, Labour Day, was not the final word. It was just a start to establish a principle, that is, that no one at the bottom can be paid less than a certain amount every month. The minimum wage principle would have to take into account the concept of a living wage which takes into account the poverty line index. This is a moving target.

Already, workers in Sabah and Sarawak are saddled with living costs up to 40% more than that in Peninsular Malaysia. This means that given the RM900 per month minimum wage in Peninsular Malaysia, that for Sabah, Sarawak and Labuan should have been RM1,260 per month. Instead, the workers are being pawned off with RM800 per month.

The Sabah MTUC itself had pleaded for a minimum wage of RM1,200 per month based on the state’s current poverty line index of RM1,048, the highest among the states.

The average monthly salary in Sabah, at the moment, is RM577, in Sarawak RM758, in Peninsular Malaysia RM1,131, according to the FSM.

There’s the worry that besides denying increments to workers across the board to overcome the Minimum Wage Act, employers will lay off workers on the bottom rung every few years and replace them with new labour on minimum wage or resort to employing more illegal immigrants and other black market activities.

The Human Resources Ministry would have to take a tough stand here with such employers. Employers form only a small percentage of voters compared with workers. It should not hesitate to refer errant employers to the Industrial Court which can throw the book at them by way of reinstatements and back pay totalling 24 months and a further six months pay in lieu of reinstatement.

No matter what good is introduced in Malaysia, there’s a propensity in the ultimate analysis to distort, deviate and corrupt everything.


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