Malaysian workers benefiting from minimum wage policy

KUALA LUMPUR: From the time of its independence and until the dawn of the new millennium, Malaysia has never made a solid move to set uniform minimum wage across the industry.

Any wage increase back then was dictated by industry offers and demands.

A 2011 World Bank Study showed that from 2000 to 2008, the average increase in wages was only around 2.6 percent a year.

This rate does not commensurate the in real labour productivity increase of 6.7 per cent a year.

This is due to the distortion in the nation’s labour market which hinders an increase in wages despite rising living costs.

The National Employment Returns survey conducted by the Human Resources Ministry in 2009 revealed that 33.8 per cent of workers received a wage of less than RM700 a month, below the average national poverty line at the time of RM800 per household monthly income.

The idea of Malaysia having a minimum wage became closer to reality in October 2010 when the Prime Minister Datuk Seri Najib Tun Razak announced the setting up of the National Wages Consultative Council when tabling the 2011 Budget.

This resulted in the National Wages Consultative Council Act 2011 (Act 732) was drafted and approved in July 2011.

It was subsequently gazetted and the council was officially established in September of the same year.

The Minimum Wage Order 2012 went into effect in January 2013 setting RM900 (or RM4.33 an hour) as the minimum wage in the peninsula and RM800 (or RM3.85 an hour) in Sabah, Sarawak and the Federal Territory of Labuan as announced by the Prime Minister in May 2012.

In line with the requirements of Act 732, the rate is reviewed again on July 1, 2016 and increased to RM1,000 a month (or RM4.81 an hour) in the peninsula and RM920 a month (or RM4.42) in Sabah, Sarawak and the Federal Territory of Labuan.

TheHumanResourcesMinistry’s secretary-general Datuk Dr Mohd Gazali Abas in a statement said that the introduction of the new rates was meant to narrow the gap between the minimum wage in Peninsular Malaysia and east Malaysia.

“The government will continue working towards setting a standard minimum wage nationwide and implement it gradually in the near future,” he said.

Whenever the issue of locals losing job opportunities or falling into unemployment comes up due to preference for foreign workers, the attitude of local youths are often cited as a reason.

This stereotype is prevalent in society.

The common misperceptions are that “youths today are so picky”, “locals are lazy” and that “locals will only work for high wages”.

“Our people are actually quite hardworking. In the context of the implementation of minimum wage, we can see that locals do not cherry pick jobs. This is proven when locals are starting to take over jobs previously dominated by foreigners such as at fuel stations,” said the Malaysian Trade Union Congress (MTUC) chairman Datuk Abdul Halim Mansor.

He believed that the implementation of minimum wage would boost the hiring of locals while still making room for healthy competition between local and foreign workers.

Abdul Halim said MTUC’s goal was to minimise the country’s dependency on foreign labour.

The intended target is a 10:1 ratio with 10 being local workers.

In order for that to happen, he is calling for a level playing field between local and foreign labour by making it compulsory for employers to pay the same cost of social protection for foreign workers as they would a local one.

This includes paying for their EPF, Socso and overtime work.

“Our people are not refusing jobs, but what is happening is that there is a lack of job opportunities. The minimum wages are implemented across the board, including for foreign workers.

“However, employers are still paying less for foreign workers as they do not need to pay for social protection as they would need to with local workers,” Abdul Halim explained.

The Human Resource Ministry in 2016 reported several positive impact from the implementation of minimum wage.

The first is that the average household income has increased from RM5,000 a month in 2012 to RM6,958 in 2016.

The average salary and wage has also increased to RM2,463 a year in 2016, compared to RM1,881 a year in 2012. Labour productivity also recorded an increase with the value per worker increasing from RM71,700 in 2012 to RM78,218 in 2016.

The implementation of minimum wage has generally also increased overtime wages as the rates are based on the basic salary received.

The 2018 Workers Day, themed ‘Skilful Workers Pioneers of National Excellence’, calls for a work ecosystem that is conducive to employers, local and foreign workers and the government.

The government has been consistent in its effort to safeguard the wellbeing of the nation’s labour force and ensuring tha t their needs are taken care of.

The Employment Insurance Scheme by Socso which went into effect in January this year provides protection for workers by providing job-seeking allowance for workers who have been laid off.

Axed workers can also apply for skills training to allow them to return to the job market and Socso will, at the same time, help them find a new job.

The introduction of the insurance scheme is an addition to current efforts such as accident protection in the workplace, in addition to promoting the fields of Technical and Vocational Education and Training among youths to help fulfil the needs of 1.8 million job opportunities by 2020. — Bernama