KUALA LUMPUR – With Putrajaya soon to amend the national minimum wage, economic experts are in agreement that it should reflect the realities of the working class, given the ever-rising cost of living.
At RM1,500 from 2022, economist Geoffrey Williams speculates it could be raised by a mere RM100 to RM1,600, which he said is insufficient, given statutory deductions.
Further, following estimations from Bank Negara Malaysia’s living wage of RM2,700 in 2018, Williams said it is time to consider a minimum wage of RM2,500–RM3,000, which he acknowledged would draw protest from employers.
“A simple solution is to remove all the restrictions on the progressive wage model (PWM) and Sumbangan Tunai Rahmah and pay employees the RM200–RM300 amount for PWM directly through the Inland Revenue Board or (based on) the Central Database Hub.
“This means the minimum wage would be RM2,200 and it could be topped up to RM2,500 through the reverse income tax credit.
“This would help employees and employers directly and efficiently without wastage, leakages and corruption. It is a form of universal basic income,” Williams told Scoop.
Meanwhile, Universiti Tun Abdul Razak economist Barjoyai Bardai said any change to the minimum wage must take into account the poverty line, which is currently at RM2,589.
Further, because Malaysia’s economy is still growing, the cost of living is expected to rise and problems would surface if salaries fail to reflect such realities.
“Employers only share 32% of their income, which is a very small amount seeing that Malaysia will become a service-based economy where salaries are to be the biggest cost for business.
“When it comes to paying wages, employers are slow to make sure salary rates also follow rising inflation,” Barjoyai told Scoop.
Setting a minimum wage is a tough balancing act for the government which would have to take productivity levels into account, he added.
“When it comes to productivity and the minimum wage, just look at the security industry, which faced problems when the minimum wage was introduced (in 2013).
“At that time, they were only paying their staff rates which were quite low. So when the minimum wage was introduced, these security businesses became less competitive and protested against the move.
“So in addition to the cost of living, when the government is considering the minimum wage, they must take into account productivity as well,” Barjoyai added.
Malaysian Trades Union Congress (MTUC) president Mohd Effendy Abdul Ghani said increasing the minimum wage by RM200 every two years would allow employers to plan business affairs with ease, but admitted this suggestion may not reflect dynamic economic realities.
Thus, Effendy said MTUC favoured a more flexible approach when setting an appropriate minimum wage taking into account factors such as inflation and living costs.
To ensure workers’ welfare, Effendy also said the government could also look at ensuring employers pay their staff according to minimum wage.
“Among MTUC’s recommendations is to enforce the minimum wage to ensure all employers comply with the determined rates.
“Strict enforcement would ensure workers are not exploited and the labour market operated fairly,” Effendy said.
Additionally, he said Putrajaya can develop policies to ensure better safeguards for workers in the informal sector, such as ensuring social protection measures since these workers are not always guaranteed an income and are exposed to exploitation.
“Besides that, MTUC also recommends that the government and employers introduce more education and training programmes to improve workers’ skills.
“This wouldn’t just increase productivity but allow workers to obtain a better wage,” Effendy added.
On Saturday, Human Resources Minister Steven Sim announced that a proposal for a new minimum wage is expected to be presented to the cabinet next month.
Sim said that his ministry received recommendations on the new rate from the National Wages Consultative Council chaired by Tan Sri Zainal Rahim Seman.
The minimum wage was last updated in May 2022, raising it from RM1,200 to RM1,500. – August 21, 2024
