MEF’s stand against minimum wage increases is nonsense

A recent statement by Datuk Dr Syed Hussain Syed Husman, President of the Malaysian Employers Federation (MEF) in Bernama on 6 February 2022 is neither surprising nor does it make sense. This article is a rebuttal of his points.

1. He (MEF) said that now is not the right time to increase the cost and said that the proposed RM1,500 new minimum wage implementation would derail economic recovery. This seems to be a standard template response used each and every time minimum wages are discussed. Maybe he should state when is the right time to increase minimum wages because it seems such a time never arrives. At all times, the MEF’s position has been no minimum wage increases, whether during boom times or recessions.

2. We must remember that most Malaysian businesses are micro, small and medium enterprises (MSMEs), whereby 98.9% are in this group. This statement does not take into account how many workers are employed by these MSMEs. In any case, PSM is of the view that this group needs to be helped but then the strategy should have been to tax the very rich individuals and companies and cross-subsidize the MSSMEs who need help. In our scenario today, the MEF will oppose all sorts of taxes like wealth tax, capital gain tax etc. The MEF will also oppose setting a ceiling for high wages. Their only strategy is to ensure and suppress wages and ensure workers who are the lowest paid remain low-paid. Increasing the minimum wage is possible if we also readjust wages and income from above.

3. “The RM1,500 minimum wage will push up the cost of goods and services and operation costs will definitely increase. But in the last few months we have been seeing an increase in prices of goods but no increase in wages. So based on this logic, how did inflation go up first without wages going up? Is there something wrong with this maxim? Shouldn’t we intead say that since inflation has gone up so wages should go up as well?

4. “The RM1,500 minimum wage would mostly go to foreign labour as the locals are already paid higher wages than this, and the outflow of money will further increase.”  This cheap point is just MEF’s attempt in trying to instigate Malaysians against foreigners who work in the 3D (dirty, difficult, dangerous) job sector. Now what is the issue if those doing the most dirty, dangerous and difficult jobs are paid more?. Having said that, it is also the MEF, who have been constantly lobbying the Government to get more foreign workers as it goes hand in hand with their cheap labour policies. Besides that today we have 300,000 workers working as cleaners and security guards in government schools and hospitals who depend 100% on the minimum wage. Most of these workers are Malaysians. So even this statement that all or most Malaysians earn more than the minimum wage is false and untrue.

PSM looks at the statement by Saravanan that the minimum wage will be increased to around RM 1500 by the end of the year with caution and suspicion. Firstly the minimum wage needs to be reviewed and be implemented at the beginning of this year and not end of the year. The only reason for this announcement now is that perhaps is it an election ploy since the election is expected in the second half of this year. For the record, both PH and BN in their last election manifestos agreed to increase minimum wages to RM 1500 by one term and this 5-year period ends next year. So this figure of RM 1500 is not something amazing as this has been promised for more than 5 years now.

PSM during the minimum wage technical committee meetings have given our views. Even if we use the government minimum wage formula in working out the minimum wage, then the minimum wage for Malaysia should be RM 2017 as shown by the table below. In spite of that we have maintained that minimum wages should be at least RM 1800, a figure which is much lower that the formula used or even by bank Negara indicators.

  MALAYSIABANDARLUAR BANDAR
Note    
aPOVERTY LINE INCOME (PLI, RM)2,2082,2082,208
 AVERAGE WORKERS PER HOUSEHOLD1.21.21.2
bMEDIAN WAGE (RM)2,0622,2681,340
cLABOUR PRODUCTIVITY GROWTH (P %)2.20%2.20%2.20%
dCONSUMER PRICE INDEX (CPI %)1.70%1.60%1.50%
eUNEMPLOYMENT RATE (UE %)4.50%4.60%4.50%
 MINIMUM WAGE (RM)2,0172,1201,641

Source:
a) Laporan Survei Pendapatan Isi Rumah & Kemudahan Asas 2019, DOSM
b) Laporan Survei Gaji & Upah 2020, DOSM
c) Laporan Produktiviti 2018/2019, MPC
d) Consumer Price Index, March 2021, DOSM
e) Laporan Survei Tenaga Buruh 2020, DOSM

Malaysia is the country with the second highest Gini coefficient in Southeast Asia. This means that Malaysians have a very high income inequality gap. We believe that an increase in the minimum wage can to a certain extent reduce this inequality gap.

It is time to build a more equitable society and trying to suppress the wages of the very poorest is not the way to go

S. Arutchelvan
Deputy Chairperson
Parti Sosialis Malaysia
7-3-2022

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