Saturday, July 07, 2007

Of Minimum Wage and Foreign Workers

My letter to Malaysiakini appear at the top page of letter section. as below.
I think its imperative that we Malaysian should write to our Govt/Minister/MP expressing our concern about this issue.
If Govt want to keep our country competitive, we could keep our exchange rate low, invest more in education, infrastructure, reduce red tape, keep inflation low and free the capital market.
Leaving the labour market completely free and unshackled, without minimum wage regulations and subject to unbridled competition from infux of illegal immigrants would only widens the gap between the have and the have-nots. Leaving the weak vulnerable to exploitation.

So what MTUC is going to do?
Organizing nationwide stoppages and pickets maybe OK for sometime, but the workers are unprotected. Soon they will get the boots from their jobs and replaced by foreign workers. The ones who will profit from it would only be the recruitment agents and the Ministry officials who approve the work permits for foreign workers. Its a lose-lose situation for low paid Malaysian workers.

I would suggest MTUC ask Govt to top up income to Malaysian workers. Sort of negative income tax.
Let say that we want our Malaysian workers have at least a minimum income if RM900 per month. If the factory he/she is working is only paying him/her RM400 per month for 40 hour week, the the Govt should pay our Malaysian worker the balance of RM500 for that month straight into his/her account.
Yes it will bloat Govt expenditure by a huge amount and Govt may have to increase income tax for those on the top bracket.
The benefit of this is that unemployment will be very low, almost zero because everyone would rather be working and get some money than unemployed and get nothing. No more graduate unemployment, because they (the graduates) will be working doing anything, even menial jobs.
This can also be construed as indirect subsidy to employers.
Western countries have this scheme for those in-work but with low income.

Hello, even China has minimum wage
Noor Yahaya Hamzah
Jul 6, 07 5:12pm

I refer to the malaysiakini report that the government would not legislate for a minimum wage law.

That is disappointing. Even China has minimum wage law. For example, China’s Shenzhen has a minimum wage of US$106, equivalent to RM365 per month. Imagine that, some of us Malaysians got paid less than workers in China. Keep it up, and soon Chinese companies would relocate to Malaysia for want of cheap labour.

However, Human Resources Minister Fong Chan Onn said that "companies with strong union representation should be allowed to negotiate better wages". That is fair, but has our union busting law have been amended to allow for umbrella nationwide unions for workers? Not as far as I know. So that is a dry statement, meaningless in other words.

Fong also said, “They can get more than RM900 so why should we determine there should be that level?”

I think our minister misunderstood that minimum wage means just that, minimum allowable wage. Any employer can pay more, much more if they want to. Just that employer should not pay wages below the minimum wage rate. Who is stopping them paying more? Duh.

So the government is saying that the presence of 1.5 million foreign workers, legal or illegal, is stopping them from adopting minimum wage law? What economic model are we following here?

Model 1: Saudi Arabia has six million guest workers, yet the unemployment rate amongst its citizens is about 30 percent. Saudi citizens do almost nothing even in their own homes, they employ maids, drivers and workers to do menial jobs, and also professional jobs. Yes, they go for jobs like doctors, engineers and teachers but that leaves most of the population unemployed.

I can see it happening in Malaysia already. We employ foreign workers to do menial jobs and give them low pay, such that the well-off Malaysians don’t want those kind of jobs. In doing so, we forget that our less-well-off citizens are deprived of the chance of securing better wages to improve their lives and share the prosperity of the country.

There is one difference between Saudi Arabia and Malaysia, that is in Saudi Arabia they have a safety net, meaning social welfare payment for the unemployed and the poor. So what level of welfare payment are we planning to pay for the unemployed? I don’t believe that employing millions of foreign workers, letting thousands of Malaysians go unemployed and paying them dole is a good model.

Model 2: European countries has minimum wage law, and the same rules apply, whether you are guest worker or citizen. Most countries has laws against employing illegal immigrants. Employers are not allowed to discriminate on the basis of colour, gender, religion, etc. Everyone is treated equally, well at least in the eyes of the law.

So if we follow this model, and legislate minimum wage law, everyone, whether foreign worker or not should get at least minimum wage, no discrimination.

If we take this European countries model, employers would not have preference for foreign workers. Let’s admit the facts that some employers prefer foreign workers because they are cheaper to employ than Malaysian workers. You can hire and fire them at will, treat them badly, assault them and maybe cheat them off their due wages (we read this in the paper sometimes).

Isn’t it amazing that our government want this to go on? I am disappointed with our elected representatives.

1 comment:

Anonymous said...

This has shown that the BN government of Malaysia is out of touch with reality and never really want to help the people of Malaysia. The obvious reason BN government does not want to implement minimum wages and enforce strict labour laws is because many of the BN cabinet ministers are having great interests in big businesses (normally owned by their cronies, relatives and friends). Raising wages and salaries of Malaysian workers may reduce the level of profits earned by these businesses, and enforcement of strict labour laws will prevent them from using cheap illegal foreign workers. If BN government had done correctly in the implementation of national labour policies in the past, e.g., by improving welfare of private sector workers, BN government should have won all the by-elections and enjoyed two-third majority forever in Malaysia.