The impact of price increases on the working class

This is a statement from MTUC’s Penang division

When prices of basic nutritional food items, such as vegetables, fish, chicken, eggs and even loaves of bread increases manifold we need to be concerned about the plight of the marginalised segment of society.

If the cost of ikan kembong, sayur sawi, telur and a loaf of bread gets more expensive to buy, this translates to an erosion of the disposable income of the working population – a 20% increase in prices of essential nutritional food means a 20% reduction of the worker’s income to meet other financial commitments. In actual terms – the poor become poorer!

So what ought to be done? Some have expressed the view that there ought to be greater intervention by the government to introduce price control mechanisms not only during the festive season but as an ongoing process. We agree with this view. Although some economists argue against these price controls, ostensibly on the premise that market forces ought to determine the supply and demand impact on food prices, we hold that this is a misplaced argument given the fact that the most vulnerable segment of our working population are enslaved in the low and middle income wage trap.

A 2018 study by Bank Negara has disclosed that a single worker living in the Klang valley needs a “living wage” of RM2700.00 per month which is grossly below the country’s minimum wage of RM1200.00. Prof. Yeah Kim Leng of Sunway University Business School has expressed his opinion that, based on the current minimum wage of RM1200.00, a worker needs to seek supplementary income by taking on an additional job. This is our reality!

Thus, it is obvious that the government has the choice of either continuing price controls and providing subsidies or migrating from a minimum wage system to a living wage module of wage administration, using the Bank Negara study as a bench mark in the matter. While the first option may well provide short term relief to the people, a progressive mind-set would dictate that the government ought to move the nation towards a living wage system of wage determination. In the absence of such a paradigm shift, our hopes of becoming a high income nation may remain just a dream!

K. Veeriah
Malaysian Trade Union Congress (Penang Division)

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