Wage hike will benefit all

FOR a nation to grow through equitable prosperity, there is always the need for sacrifice from all quarters, what more from those who benefited the most from the nation’s wealth in the past.

It requires an attitude that goes beyond sector-based thinking. Such an attitude seems to be lacking on the part of the Malaysian Employers Federation (MEF). The MEF had reportedly been caught off guard by the announcement in Budget 2018 that the minimum wage would be increased to RM1,100 from RM1,050.

Its executive director Shamsuddin Bardan said the move would only benefit the country’s estimated 1.8 million foreign workers.

Saying it was a flip-flop decision by Putrajaya, Shamsuddin added foreign workers would be laughing all the way to the money changer. He warned that the increase would lead to prices of goods and services rising.

Although I would agree the government should not have flipflopped and should have got it right the first time, I beg to differ on his subsequent statement.

How did Shamsudin come to the conclusion that foreign workers would benefit more than Malaysian workers due to a hike in the minimum wage? Is it merely due to the ringgit outflow to for- eign countries through repatriation?

The fact is, foreign workers work long hours without rest and some of them have no day off. Employers do not need to pay EPF and Socso for these foreign workers. Isn’t it justified that they should be paid fairly for their day-and-night contribution?

Think of foreign workers who come in through agents who take a substantive portion of the workers’ income and in turn pay them low salaries for 12 or more hours of work, with no overtime payment. Are these foreign workers mere cogs in the machines that should be used without appropriate compensation?

Secondly, the argument that foreign workers would benefit most from the increase in the minimum wage does not hold water in the long-term.

There has been a general decrease in foreign workers in the country. By the end of August 2018, the number of foreign workers has fallen to 1.7 million or 12% of total employment.

This suggests that the bottom 40% of Malaysian households would benefit more as the Pakatan Harapan government’s rationalisation process of foreign workers takes place. Under this process, the authority to bring in foreign workers would come under the Human Resources Ministry.

A gradual hike in the minimum wage for Malaysian workers has a lower impact on the economy. It is projected that the minimum wage would promote a shift in the workforce from low to semiskilled and skilled workers that would lead to higher GDP in the long run.

In terms of the higher cost to consumers due to an increase in the minimum wage, the MEF president seems to have a myopic view of the Pakatan Harapan government’s efforts to facilitate the use and development of artificial intelligence, digitalisation and hi-tech processes that would help increase productivity.

As stated in Budget 2019, the government will set up a RM3bil industry digitisation transformation fund to encourage industries to use artificial intelligence. This would help increase efficiency and bring down the cost of production in the long run.

The high cost of consumer goods is not merely due to higher salaries. It has a business monopolistic dimension on how supply chains are structured in the economy besides the role of middlemen in the distribution of services and goods.

Malaysia needs to build the necessary foundation for a transition to a higher-value economy.

The maiden Budget by Pakatan intends to create a balance in this aspect but it would need a major change of attitude among certain employers especially those who keep holding on to the old model, that the increase in the minimum wage would increase production cost and ultimately be transferred to consumers, resulting in a higher cost of living.

Such a narrow doctrinal view has no place in progressive Malaysia. We need a change in attitude among employers so we can embrace the transition to a higher value economy.

It requires an attitude and behaviour that rises above sector-based thinking.

There has been a general decrease in foreign workers in the country.