THE government should be lauded for introducing the minimum wage for workers in the private sector. This is something that has been long sought by workers.
The painstaking effort of the National Wages Consultative Council and Human Resources Minister Datuk Seri Dr S. Subramaniam, who early last year addressed the issue of low-income workers in the private sector who earned less than RM700, well below the poverty line of RM800, is to be praised.
The minimum wage has been fixed at RM900 per month in the peninsula, except for maids and gardeners.
In Sabah, Sarawak and the Federal Territory of Labuan, the minimum wage is RM800. This will give the lower-income group a respectable quality of life.
According to the World Bank Report 2011, the slow growth of wages relative to labour productivity (2.6 per cent in wage rate to 6.7 per cent in productivity rate) illustrates the suppression of wages, especially of low-skilled workers, and inefficiencies in the labour market.
There are detractors who say with the implementation of the minimum wage, the economy will collapse or the country will go bankrupt.
Well, more than 80 countries in the world have introduced the minimum wage -- including Britain and the United States -- and their economies have not collapsed.
The government is working hard to bring structural reforms and innovation and productivity programmes aimed at boosting the nation's competitiveness and efficiency.
With the minimum wage in place, the main concern will be the domino effect on the prices of goods and services.
There may be a backlash from employers who see their profit margin reduced because of the increase in labour cost. Some of the concerns of employers are genuine.
From the human resources standpoint, cost management is an important criterion and employers may resort to cost-saving measures on non-fixed allowances or slash overtime hours, commission or other perks. They may now spend less money on training and development and other benefits.
Employers and the Human Resources Skills Development Centre must forge a smart partnership in conducting training and development on process and productivity improvement, which in turn will result in adding value to the customer in terms of service and products with lower cost.
This will increase the revenue of the organisation without employers resorting to removing the perks and allowances of employees.