MTUC says minimum wage must be recommended by council

KUCHING: The Malaysian Trade Union Congress ( MTUC) Sarawak in response to the election campaign promise by both political coalitions, welcomes the much needed increase in minimum wage, but cautions that it must be based on sustainable economic policy and the labour market.

In a press statement, MTUC said that minimum wage must be recommended by the Minimum Wage Council after taking into account the relevant socioeconomic factors.

“The increase must be based on sustainable economic policy and labour market, not at the whims and fancies of politicians. Workers’ rights must not be hijacked by politics,” said MTUC secretary Andrew Lo.

Minimum wage, said the statement, has been calculated based on the formula adopted by all parties of the Minimum Wage Council and took into account relevant factors including poverty line index or average household income earner, employers’ ability to pay, cost of living, productivity growth, and unemployment rates.

It is therefore imperative to ensure that the minimum wage formula calculation should be consistent and reflect the relevant values.

“During the past decade productivity of growth far exceeded wage growth. In order to become a high income economy, the Malaysian government has decided to implement a minimum wage policy,” said Lo.

For subsequent review, he added, it is crucial to ensure that the actual productivity growth be used, not average value of one year, as using only one year value will distort the productivity and cost of living.

“It would further drag wage increase to lower than productivity growth. It must be noted that one of the impetus to implement a minimum wage policy was wages growth has lagged behind productivity growth in Malaysia as reported by the World Bank,” he added.

Currently, the minimum wage is lower in East Malaysia only because employers in Sabah and Sarawak have been paying lower wages the past decades, he said.

He added that while the aim is to have a uniform rate, this should be achieved on a gradual basis.

“To insist on a uniform rate now risk adopting a lower rate detrimental to workers in West Malaysia which make up 70 per cent of the total workforce. Given the converging data, we would expect uniformity to be achieved by the next review,” he added.

According to him, Malaysia should achieve a minimum wage of RM1,500 much earlier than Pakatan Harapan’s manifesto of five years based on compelling data to support a minimum wage for Peninsula Malaysia and at least RM1,300 and RM1,200 for Sabah, Labuan and Sarawak.