BANK Negara Malaysia, in its recently published 2018 Annual Report, created a bit of a storm on the issue of Malaysian workers’ productivity versus the relatively low wages they were getting.
The contentious part of the report stated that for the same output of productivity in a certain job, Malaysian workers are paid relatively less than their counterparts in more advanced economies.
It is not about the skills needed to do a job, which are the input.
This part of the report is good in a sense that it is “comparing apples with apples”.
Trade unions used the report to confirm their longstanding grouses about local workers being underpaid.
They also used this report to criticise employers’ complaints that Malaysian workers were not productive enough.
As for the real cause of the relatively low wages in Malaysia, the Bank Negara report does not seem to give the full answers.
Improving the wages of our workers via improving their skills and knowledge should always be supported.
Also, the frustrations of many employers that Malaysian workers are not productive or skilled enough need to be appreciated and understood too.
Our education system should be blamed for much of this problem as explained in my previous article in this paper titled “Why Our Education System Needs An Overhaul”.
Not surprisingly, foreign workers are often blamed for “spoiling the market on local wages”.
But these workers were, and are still needed in industries such as plantations, construction and menial services and “dirty jobs” that our locals are not keen to work in.
It is easy to talk about automation but only the manufacturing sector has been able to use economically viable automation technologies on a significant scale so far.
Even in manufacturing, we still need labour but more towards skilled workers as we move up the value chain of being more productive and profitable.
We are not at the stage yet to be able to produce cost-efficient machines or robots that can harvest oil palm fresh fruit bunches, do menial work and the work of domestic maids and construction workers.
Until then, we will continue to rely on foreign workers and even qualified refugees to help develop our economy.
So let’s stop being racist or xenophobic by blaming foreign workers for our economic problems such as low wages.
We must accept that without foreign workers, our economy would not have been able to progress much.
In fact, the success of all our previous mega projects depended heavily on foreign workers.
The issue of the high number of illegal foreign workers and refugees linked to human trafficking is another matter which needs to be tackled justly and compassionately with the welfare of the victims in mind.
So, why are Malaysian workers paid relatively less based on productivity output?
We cannot use the argument of poor skills and knowledge as these are input factors.
The answers may lie in the higher “cost of doing business” in a developing country like Malaysia compared to developed ones.
The cost of doing business includes the cost of dealing with an inefficient bureaucracy and corruption, especially in giving bribes.
There is no doubt that our country has suffered much from corruption over the years, which has a direct negative impact on our economy.
Corruption also has a very high social cost, in carrying out enforcement, investigation, prosecution and court trials.
And for the culprits who are found guilty, there are also the costs of jailing them.
Instead of doing away with Moral Studies in schools, we should review and change the contents and recalibrate our priorities in educating our students on the two greatest moral evils facing the world today — corruption and extremism.
Therefore, when the cost of doing business here is high and because business would normally need to maintain a certain bottom line (profitability), there would be less funds or money left to pay the workers well. It may be as simple as that.
It is in the best interest of trade unions, employers and the public to oppose and eradicate corruption, so that there would be more money for the workers and less social costs.
More profits would also mean more taxes for our Inland Revenue Board.
The writer is a political strategist and former CEO of the Malaysian Timber Council. He is also CEO of a social enterprise proposing Carcosa Seri Negara for a peace and cultural diversity tourism project.