We’ll convince Mahathir on minimum wage policy, says Wong Chen

Wong Chen of PKR says a RM1,500 minimum wage makes sense morally and economically.

SUBANG JAYA: PKR’s Wong Chen says Pakatan Harapan (PH) will “convince” Dr Mahathir Mohamad on the need to set the minimum wage at RM1,500, despite the former prime minister’s past criticism of the policy.

After Prime Minister Najib Razak announced the minimum wage policy in 2012, both the opposition pact at the time, Pakatan Rakyat, and Mahathir, who was then still part of Umno, expressed reservations, but for different reasons.

Pakatan Rakyat criticised the RM900 minimum wage rate per month in Peninsular Malaysia and RM800 rate in Sabah and Sarawak as being too low.

DAP secretary-general Lim Guan Eng said then that this was lower than what Pakatan Rakyat had proposed – a nationwide RM1,100 minimum monthly take-home pay, inclusive of all fixed allowances, but excluding overtime payments.

On the other hand, Mahathir, Malaysia’s longest serving prime minister who oversaw the country’s “industrial revolution” in the 1980s and 1990s, voiced concerns that this would increase the cost of business and have a domino effect, and possibly deter domestic and foreign investors.

But now, Mahathir and his party PPBM, now part of PH, have been pushing for a RM1,500 minimum wage.

So where does the opposition stand on the minimum wage issue?

RM1,500 minimum wage goal stays for PH

In an interview with FMT, Wong, who is part of PH’s policy group, said although the coalition was still in the process of finalising its policies, he would try to convince Mahathir of the need for a RM1,500 minimum wage.

“A RM1,500 minimum wage doesn’t just make sense morally, it also makes good economic sense,” said Wong.

The minimum wage is currently RM1,000.

The Kelana Jaya MP said the additional RM500 would mean that the poorest people would have RM500 extra disposable income which, via consumption, would eventually profit the economy and all businesses.

“When we look at the market now, the number of people actually earning minimum wage is extremely small. No employer can actually attract quality workers on the current minimum wage.”

Wong said PH estimated that some 300,000 of Malaysia’s 14.96 million workers earned a minimum wage across all industries, and that this included part-time employees.

He said increasing the pay of these 300,000 people would not severely impact the economy of Malaysia’s 31 million population, adding that falling exchange rates had a bigger inflationary impact.

Still, Wong said to mitigate undue negative impacts on businesses from a RM1,500 minimum wage policy, an arrangement would see the government and private sector split the cost of the RM500 increase.

“So if the minimum wage increases by RM500, the government will pay RM250 and the employers pay RM250. This was the model which Singapore used before.”

He said this “co-paying” model allowed businesses to continue operating with minimal impact and should last for three years until the economy normalised. The programme would cost an estimated RM900 million a year.

“There will be people who say, ‘Why should taxpayers’ money go towards private sector wages?’

“Well, think of it this way: if your neighbours aren’t poor, then the crime rate and other related social problems will also be reduced. This is a small price to pay for long-term social mobility and improved equality.

“Everything Pakatan Harapan plans to do serves a purpose, and this purpose is to eliminate poverty and desperation for all Malaysians.”

He added that the move to increase the minimum wage would not happen overnight and that it would probably take a year to crunch the data and field test policy models before full implementation.

Wong said that over a period of 10 years, a PH government would look to shift from minimum wages to living wages in a bid to further reduce inequality.

Shamsuddin Bardan of MEF says wages should be fixed according to certified skill sets.

Minimum wage hasn’t resulted in increased productivity

Meanwhile, the Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan said four years of the minimum wage hadn’t resulted in increased productivity, and had only increased the cost of doing business.

He added that it had contributed to rising operating costs, alongside increased costs arising from enhanced Socso coverage and the proposed employee insurance scheme, which, he claimed, had resulted in established companies such British American Tobacco, JVC, Seagate and Western Digital packing up and moving to other countries in the region.

Speaking to FMT, Shamsuddin said MEF hoped the government would consider moving away from minimum wages to fixing wages linked to certified skill sets, which would ultimately see employees upgrading their skills so that they could earn more and at the same time increase their productivity.

“If you want to have an increase in wages, there must be an increase in productivity.

“Look at lower-end wages as of January 2013 when the minimum wage policy kicked in. The salary of workers, particularly foreign workers, increased by nearly 100%.

“The next increase in 2016 saw an increase in salaries of 15% for workers in Sabah and Sarawak and a 11% increase for those in Peninsular Malaysia.”

Pointing to the the Malaysia Productivity Report 2016/2017, Shamsuddin said the country fell short of its targeted 3.7% labour productivity growth under the 11th Malaysia Plan, managing only a 3.5% growth rate.

International Trade and Industry Minister Mustapa Mohamed had attributed this to the financial market’s volatility and uncertain business confidence.

Shamsuddin said without increased productivity, there was no inflow to make up the difference in increased costs.

He added that in 2016, more businesses reported lower profits and even losses, and that 2017 wasn’t expected to be much different.

Shamsuddin said an increase in minimum wage, which would also increase EPF contributions, might push employers towards automation and affect job creation.

He said an increase in wages would also be passed down to the consumers.

Abdul Halim Mansor of MTUC says they are pursuing better minimum wages that are fair to workers, businesses and the economy.

MTUC wants minimum wage which is fair for all

However, the Malaysian Trades Union Congress (MTUC), wants better wages. Its president Abdul Halim Mansor said in pursuing better minimum wages, the union would look at the economy and the needs of everyone nationwide, including workers and businesses.

“We want a minimum wage which is fair to workers, businesses and the economy. We can’t simply place a figure which may end up discouraging economic activity.”

Halim said in the past, the union’s leaders had proposed a RM1,500 minimum wage, adding that the case made for it might not have been strong enough.

“I believe the figure of RM1,500 follows the Selangor model of the minimum RM1,500 wage for public sector workers.”

Halim explained that every two years, the National Wages Consultative Council (NWCC), a tripartite body comprising the government, employers and employees, would review the minimum wage.

This, he said, was the beauty of the minimum wage policy in Malaysia, as the NWCC involved all stakeholders. He said this meant that no one could simply make changes to the minimum wage because all NWCC stakeholders had to make a decision by consensus, which ensured a balance of interests.

Halim added that Malaysia’s minimum wage policy was also free from political interference because if it wasn’t, investors wouldn’t invest in Malaysia.

He rubbished claims that the minimum wage had led to companies taking their businesses to other countries, saying businesses which did so were only seeking better profits without wanting to protect the rights and interests of their workers.

“The minimum wage is a guideline. Employers can pay more but not less, and this does happen in the market.

“So employers shouldn’t complain about productivity, because the onus is on employers to find employees who can contribute to the company equal to the pay they receive.”