Sunday, July 15, 2007

Syed Husin Ali on minimum wage

Dont let the issue buried under apathy and 'what can we do' attitude. Keep it up, for the welfare of millions of Malaysians are at stake.
Malaysiakini and sometimes Malaysia-today have articles and reports on this, but other paper...

13/07: Government rejection of minimum wage
[print] Category: General Posted by: Raja Petra
It is most disappointing that the Government (through the announcement of a Deputy Minister) has summarily rejected the suggestion by MTUC for minimum wage to be introduced in the private sector. But we should not be totally surprised, knowing the government policy and whose interests it normally protects.

Actually, MTUC has consistently requested for minimum wage to be introduced across the board, but the government rejection seems to be confined only to the private sector. Although the government has raised salaries and allowances for government employees, it has not committed itself to the idea of minimum wage for the pubic sector workers.

Be that as it may, the rejection announced by the deputy minister shows that the government really does not have the plight of the low income workers close to its heart. Surely the government knows that workers who would be affected by a minimum wage bill would be Malay.

About a third of the Malays employed are at the bottom of the occupational hierarchy. If the government is really serious about closing the inter-ethnic income gap, an effective way to do so would be to see that those at the bottom get better income – not screaming and shouting about shares in companies and ownership of commercial buildings.

One wonders why the government is so concerned about the views of big business, especially foreign investors, on the minimum wage issue and not, for example, on mandated shares in companies when it comes to it. Why is the government so solicitous over the privileges of the few, but not on the plight of the millions? In addition, what evidence is there that foreign investors come here because of wages? If low wages were a major concern, how come foreign investors are not rushing to Indonesia in droves?

The government must reveal to the public how many workers make less that RM900 per month, and how many make less than RM750 a month (the approximate poverty line income for a household). In other words, we need to know how many workers would actually be affected by minimum wage. Government policy and decision must be based on hard evidence.

The government argues that small enterprises cannot afford the minimum wage requested by MTUC (RM900 basic and RM300 cola). Three questions arise from this argument, namely: (a) does the government know how many there are and what proportion of the total employed are in them, (b) whether such low productivity and low wage enterprises contribute significantly to the country’s development and if it is more beneficial in the long run to allow them to continue, and (c) if it is necessary, what kind of mechanisms can be adopted to help them survive.

Actually, the argument that small enterprises will be adversely affected by minimum wage provides excuse and cover for the government to protect the interests of big and giant companies, both local and foreign-owned. What is stopping the government from ensuring that these companies accept minimum wage? It is public knowledge that these companies instead prefer migrant workers who can be paid lower than local workers.

Regarding foreign workers, the Deputy Minister has inadvertently let the cat out of the bag. The government has always claimed that foreign workers are only employed here on the same conditions as local workers, and that foreign workers are not being used to keep the wage rate down.

Now, the minister objects to a minimum wage rate as it would mean that foreign workers would have to be paid the same as locals. So, the government has all along been lying, and their lies have meant that the labour market in his country has been distorted by import of foreign workers to deliberately keep down the wage rate.

Over the past 25 years, the share of wages in value-added in the manufacturing sector has dropped from around 30% to around 20%. This means that workers have not gotten their share of the increase in productivity as measured by value-added per worker. This is one reason for the increase in inequality in the country. Do we wish this inequality to increase and threaten political stability and national unity?

The government as well many who share its view warn that minimum wage will jeopardise the country’s economy. This is unlikely to happen if it is combined with policies that encourage a shift to higher productivity sectors. This is what the government all this time has failed to consider and implement.

Dr Syed Husin Ali
Deputy President
People’s Justice Party

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