Minimum wage – don’t count on a quick fix

 

Prime Minister Anwar Ibrahim’s undertaking that the minimum wage issue will be resolved “once and for all” by June must have come as a relief for workers.

It took Malaysia more than five decades to realise that workers must be paid at least a certain sum in remuneration to ensure that they have a decent standard of living.

Before 2013, employees were basically at the mercy of their bosses.

But the implementation of the minimum wage has not been easy either. Employers have cited various reasons for objecting to it or they have found ways to reduce their obligation.

Many have argued that any increase in salaries must be in tandem with a rise in productivity.

It is not difficult to see their point of view. One certainly cannot expect to get more for the same effort.

Anwar’s admission on May Day that the implementation of the minimum wage had been “difficult and somewhat erratic” only goes to show that a decade on, the problem persists.

Even now, some workers have yet to benefit from the minimum-wage rule. Those who work in the smaller companies will only get to take home RM1,500 a month from July 1, if all goes well.

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But by all reckoning, a global recession is already looming. Will this mean more hiccups on the road to the full implementation of the minimum wage rule?

As it is, many companies are still struggling to recover from the economic fallout brought on by the Covid-19 crisis.

As many small and medium enterprises have complained, even a small addition in expenditure could put some of them out of business.

A proposal for businesses to raise their contribution to their employees’ EPF (Employees Provident Fund) savings to 20% — which Anwar has also promised to look into — has invited more criticisms.

To help employers overcome the problem, activists and union leaders have proposed that the government provided a wage subsidy to help companies, especially the smaller ones, meet the minimum salary requirement.

Of course the money will have to come from taxpayers. Otherwise, taxes on goods and services will have to be raised.

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This will lead to increases in the prices of goods and services, including essentials, to a level beyond the reach of those in the low-income group.

It is a vicious cycle.

Unless he already has something in the bag, it will be difficult for Anwar to come up with a quick solution. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.