Income Dist, Minimum Wage Etc

I wrote this a couple of weeks a go. Only today this appear on Malaysiakini letter. Been slack since then..
Too much TV..and a bit preoccupied with my listings on www.trademe.co.nz not that I am making millions..

Minimum wage for both foreign and local workers
Noor Yahaya HamzahAug 7, 07 6:22pm Adjust font size:

I refer to the letter Taxing rich to pay poor is daylight robbery.


Ideally, in a free labour market, free capital market and free goods market, everyone would be justly compensated, whether he is an entrepreneur, public/private servant or self employed.

Ideally, all who earn a living would chip in for the care and expenses of those who are unable to work, ie the incapacitated, the old and the very young. In one way or another.

In a civilised society like Malaysia, we elect a government to act on our behalf to do the things that we cannot do ourselves to attain a civilised society, ie defence, policing, taking care or the weak in society and fair distribution of national income.

Why are taking care of the weak in society and fair distribution of national income important? Because that is related to peace and rate of crime. If the rich are hogging a large portion of resources (read: wealth) and the poor are hungry, very soon the poor would just take (read: steal, rob) from the rich. 'What you don’t want to give, we will take.'

We have seen this from many ‘unrests’ and revolutions in history. No one came out the winner, neither the rich nor the poor.

Now back to the main theme of minimum wage. Ideally, I would 100 percent support legislation for a Minimum Wage Law. That is the first choice. Everyone should be paid at least a minimum wage, on ‘pro rata’ basis. I would go further to suggest that it is set on hourly rate basis. Just like in the Western Europe. There is nothing wrong in following a good example.

When I say everyone, it means just that, whether a local or foreign worker. I do not condone discrimination, and I loath to see rampant discrimination in my homeland Malaysia.

If the government is incapable or unwilling to do that, (what kind of government is this?) I would suggest setting a standard minimum living income/wage for at least for the Malaysian citizen. If the employer doesn’t pay the full amount of the minimum living wage, then the government shall top up the said worker's income.

Explanation? Our collective income as a nation (your wage, my salary, employers' profits, etc, totals national income) should be divided more or less equitably and fair to make everyone happy. If employers are unwilling to pay decent wages (because they want to trade profitably) then it would be fair that the government tax their profits to be distributed back to the workers.

This is not 'daylight robbery' but merely redistribution of resources (read: income/money) that the employer unwilling to do. That is the function of a decent government. I merely write about income top up, not full Negative Income Tax (NIT). If we implement full NIT, the bill would be horrendously high, and taxes would have to be much higher.

The easiest, most common method would be to implement Minimum Wage Law. If we care so much about our nation competitiveness, we simply have to lower our exchange rate and improve our efficiency. Minimum wage is about fair distribution of income, it has nothing to do with competitiveness.

Now, would 'pendatang tanpa izin' (illegal immigrants) flood the country? You see, they (these ‘pendatang tanpa izin’) come to work, because there are plentiful jobs. Jobs that pay a pittance (eg, RM10 a day for 12-hour day) that Malaysians don’t want to do. Who want to work for that much money? You are practically subsidising the employer.

If there is minimum wage of RM900 a month for 48-hour week (or RM4.20 per hour) millions of unemployed and underemployed Malaysians would be clamouring for available jobs, and the ‘plentiful jobs’ would soon vanish. Employers would take steps to improve efficiency (because of higher wages).

The spillover effect is that workers have more disposable income to spend in the country which would then improve the economy, which in turn will create more jobs.

As in the West, the government must make a rule that employers first look for local workers/talent first before employing foreign workers. The wages paid to either must be the same, no discrimination.