AMINIMUM wage policy is always resisted by employers and it is no different in this country. It took quite some time before employers would meet their obligation when a minimum wage was introduced. As of July 1, the new minimum wage rate will come into effect. In Peninsular Malaysia, a hike of RM100 takes it to RM1,000 or RM4.81 per hour. In Sabah, Sarawak and Labuan, the increase is RM120, taking the minimum wage to RM920 or RM4.42 per hour, definitely not a king’s ransom, but still disputed by bosses. They argue that increased cost of production is not tolerable given a weakening economy. To add insult to injury, they threaten to pass the cost on to consumers.
It is important to remember that the minimum wage is about providing every worker a living wage and, as the government states, it is for all, including foreign workers. This is a very important provision because if employers consider it too high, then they will be more circumspect about importing labour. As a result, to continue production, manufacturers, for example, will need to mechanise further. The upgrading of technology is part of the transformation exercise to modernise the economy. Thus far, because salary for migrant labour is kept depressed, manufacturers opt for labour intensive operations. The minimum wage law then makes them uncompetitive, when technology promises to increase productivity. Meanwhile, it will also end the use of unskilled labour, helping the government’s upskilling effort.
Indeed, if employers carry through their threat of passing the increased cost of production to consumers, theoretically, it is justifiable, as long as there is no profiteering. Ultimately, it is up to the consumer to buy or not to buy. And, when the money goes towards the salaries of those doing 3D jobs (dangerous, dirty and difficult), it will, in the end, make these jobs attractive enough for Malaysians who go abroad as 3D workers, because the pay is much better. This is another facet of minimum wage; although it must be said that paying workers doing 3D jobs dirt money is not acceptable. As the New York City sanitation workers strike in 1968 demonstrated, this “dirty” job is indispensable to public health and general cleanliness. At the end of the strike, some 100,000 tonnes of trash were uncollected from the streets. The New York Times had said the city looked like “a vast slum”. When 3D workers withhold their labour, the community is in trouble.
Naturally, minimum wage aims to raise the standard of living of low-paid Malaysians. It is an exercise in wealth redistribution, a concomitant arrangement of the social contract because a public policy that marginalises low-paid workers is one that invites trouble. Malaysia has been very fortunate that gaps are filled by migrant workers. However, as the shortage of Indonesian domestic help demonstrates, when countries of origin modernise, and employment opportunities increase, they will stop coming. If Malaysians are unwilling to prepare for this eventuality through production technology upgrades, accompanied by upskilling and minimum wages that accommodate the cost of living comfortably, the shock, then, is inevitable and the economic disruption terrible. Minimum wage, hence, is a vital facet of the country’s economic transformation.