Thursday, July 19, 2007

Tax rich more, give money to lower-end workers

my writing on Malaysiakini today.

I think I wrote this last week.

Tax rich more, give money to lower-end workers
Noor Yahaya Hamzah

Jul 19, 07 6:00pm Adjust font size:
With regards to setting a minimum wage, I think it is imperative that we Malaysians write to our government expressing our concern about this issue.

If the government wants to keep our country competitive, we could keep our exchange rate low, invest more in education and 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 an influx of illegal immigrants will only widen the gap between the have and the have-nots. And leave the weak vulnerable to exploitation.

So what is the MTUC is going to do? Organising nationwide stoppages and pickets maybe okay for the short-term, but the workers are unprotected. Soon they will get the boot from their jobs and will be replaced by foreign workers. The ones who will profit from this would only be the recruitment agents and the ministry officials who approve the work permits for foreign workers. It’s a ‘lose-lose situation’ for lowly-paid Malaysian workers.

I would suggest to the MTUC to ask the government to top up the income of Malaysian workers. Sort of a negative income tax. Let’s say that we want our Malaysian workers to have at least a minimum income if RM900 per month.

If the factory he/she is working in is only paying him RM400 per month for a 40-hour week, the Ggovernment should pay our Malaysian worker the balance of RM500 for that month straight into his account.

Yes, it will bloat government expenditure by a huge amount and the government may have to increase income tax for those in the top brackets.

But the benefit of this is that unemployment will be very low - almost zero - because everyone would rather be working and getting some money rather than being unemployed and getting 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 working but with low incomes.

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