Minimum wage, revisited

ARCHIVES 2012

By admin-s On May 10, 2012

I would have thought that the government is done with all the committees and studies before announcing the implementation of a minimum wage. If such an important consideration escaped their attention, what did they actually study?

Kamal Amzan (TMI)

This is getting tiring.

Let us begin with the news report from The Star on May 1, 2012. It said: “A focus committee will be set up to make adjustments to the minimum wage system for certain industries. The committee will sit down with all these industries and figure out the differences.”

Dr Subramaniam, the Human Resource Minister, was also quoted as saying: “It will be dangerous to the country if we politicise an economic tool. I want to challenge those irresponsible people who said the minimum wage should be RM1,500. I am sure their factories will close down.”

To the good minister, it is reckless and will endanger the economy announcing minimum wage without accommodating all industries involved. What more when the industries mentioned include the tourism and agriculture sectors that form the backbone of our economy.

The minister said at RM1,500 a month, a lot of factories will close down, but he didn’t mention how many factories do they expect to close shop when they set the wage at RM900 a month. What will happen to the foreigners working in factories and plantations? Will they also benefit from this announcement? Because this will otherwise encourage the influx of more illegal workers who are willing to forgo working at the minimum wage.

At the moment, it is quite easy to be an illegal worker in Malaysia especially in Sabah. Our borders are quite porous.

By the same logic, if you cannot stop the influx of illegal foreign workers into Sabah, how can you afford to promise a higher wage to locals? Who will want to hire expensive locals than cheaper, harder working illegal foreigners?

Dr Subramaniam also said: “Most employees in Sabah and Sarawak will get a double pay increment.” I wonder if the productivity will also double to cover operating cost. Because if not, one of two things will happen, they either downsize the work force or pass the cost to consumers.

The University of Vermont, in a research conducted to ascertain relationships between minimum wage and employment, showed for every 10 per cent rise in wage there is a one per cent reduction of employment in teenagers, so did the University of Stanford some 10 to 15 years ago.

Teenagers in US are equivalent to our SPM and PMR holders who will be the ones to suffer the brunt of this poorly concocted scheme.

But I am not here to argue the pros and cons of minimum wage. I have done that before and I am sure many will take up the challenge.

I am here to write about how our government can afford to come to such an important decision without consulting the relevant groups. If this is not irresponsibility, I do not know what is.

Already they have flip-flopped over so many decisions in the past — the crooked bridge, PPSMI, 1 Malaysia and the MAS and AirAsia share-swap deal. How many times have we heard them say, “We have spoken to the relevant parties, discussed at length, formed high-powered committees to IMPLEMENT a policy”, only to have the whole thing reversed a few months/years later with the same line, “We have spoken to the relevant parties, discussed at length, formed high-powered committees to REVERSE a policy.”