The Star’s “Resistance against minimum wage”, published on 29th August 2022, does not give a balanced perspective on the minimum wage issue. The piece uncritically presents the views of business leaders, consisting of a few unsupported “concerns”, citing only the survey statistics of business owners and their feelings towards the new minimum wage (shockingly, they aren’t in favour of it.).
As such, it is worth responding to these arguments by placing them in the proper context of Malaysia’s economy to demonstrate precisely why the RM1,500 minimum wage, among other pro-worker policies, need to be implemented immediately in Malaysia. The primary arguments of the article are as follows:
- Micro, Small, and Medium Enterprises (MSMEs) may not have the resources or flexibility to comply with the new minimum wage.
- The government should focus on providing these MSMEs with more incentives, subsidies, and other programs to support their businesses.
- Malaysia should also focus on creating more “high-skilled” jobs, rather than trying to improve the lot of so-called “low-skilled” workers
Let’s start at the very beginning.
MSMEs are indeed a key pillar of Malaysia’s economy. According to the Department of Statistics, 48% of workers in Malaysia are employed with MSMEs, and up to 97.4% of businesses in Malaysia are MSMEs, making up 38% of our national GDP. Such businesses should certainly be supported with policies like training programs, targeted subsidies, tax incentives, and other policies which can help them continue to survive and continue, to avoid undue stress on a key pillar of our national economy.
Indeed, it is precisely because these MSMEs are such a key component of Malaysia’s economy that they cannot be exempted from policies which enshrine the well-being of workers. Shall we say that nearly half of all Malaysian workers should not benefit from policies that would protect their interests, simply because they work for smaller companies? No. In fact, these workers, who often cannot find work elsewhere and are vulnerable to exploitation and abuse, are exactly the ones who need to have their rights safeguarded and guaranteed by policies like the minimum wage.
History has shown us time and time again that where businesses are supported by supply-side policies (ie: subsidies, levies, etc), without adequate protections for workers, business owners, big and small alike, are happy to pocket the profit, while leaving their workers worse off than before. In truth, any “business friendly” policies must be accompanied by reforms like the increased minimum wage, to ensure that these profits are fairly shared with the workers who create the value for these businesses.
“But what about those businesses who just can’t afford it? What if the company is operating on such a slim margin that the new minimum wage could cause them to go out of business?”
Let us put aside, for a moment, the moral bankruptcy of a company that can only survive because it exclusively employs the most vulnerable groups of workers and pays them the bare minimum required by law.
This argument ignores the likely and probable long-term benefits that businesses enjoy when the minimum wage is raised. Recent economic scholarship has thoroughly shown that increasing the minimum wage has positive impacts on the aggregate productivity and economic well-being of a nation, and the old “Economics 101” argument that raising the minimum wage leads to less productive and “lazy” workers is demonstrably false.
While the argument against the minimum wage often frames it as a handout that benefits lazy workers for doing the bare minimum, there is a growing consensus among serious academics that the opposite is true: that when workers are guaranteed their basic necessities and do not have to worry constantly about being able to make ends meet, the country becomes more, not less, productive. This increased productivity, in turn, is likely to benefit businesses in the long run, helping them operate more sustainably, and thus be able to afford the newly enforced minimum wage.
“But what if that isn’t true? What if a business really can’t survive paying its workers a higher minimum wage?”
Let us return to the moral question.
Frankly, if a business is truly unable to exist without exploiting the most vulnerable workers in Malaysia, and if they cannot fulfil the basic criteria of fairly compensating their employees for their work, perhaps it would be better if it did not exist at all. Let the much vaunted “free-hand” of the market take it away, and replace it with a better business that can actually provide its services with a clear conscience and take care of its employees.
“But what about the argument for the creation of “high quality, high-skill jobs” jobs which will in turn lift more Malaysians out of poverty?”
This, put bluntly, is a misdirection that ignores the reality of labour and work.
In reality, raising the floor for how the most vulnerable and marginalised workers are treated in Malaysia is key to improving the welfare of all workers in Malaysia, even those in so-called “high-skilled” jobs! As long as the shadow of terrible & exploitative “low-quality” work hangs over the heads of all workers in Malaysia, even the highest-paid professionals cannot rest easy. Most of us are only ever one bad financial month away from joining the unnamed, exploited masses, and if we do not stand in solidarity with them, we are only endangering ourselves.
Let us also state this plainly: There is no such thing as a “low quality” job. As the issue of “frontline workers” has reminded us over the course of this pandemic, it is precisely the most unglamorous of workers: delivery drivers, cleaners, security guards, garbage workers, ad infinitum who hold up the foundation of our economy. And the minimum wage is precisely for the benefit of these workers, who are so often exploited and mistreated in the very economy they hold up!
While RM1,500 is still not enough to fairly reflect the value these frontline workers create for our country, it is a step in the right direction and a point from which to continue the struggle.
The fact of the matter is this. Workers in Malaysia are being squeezed from all fronts, by comparatively low wages accompanied by the soaring cost of living, the escalating climate crisis literally drowning the most vulnerable Malaysians, and the global economic uncertainty that threatens another recession. They cannot afford to wait and have their concerns and interests diverted and “taichi-ed” by sneaky business leaders, who are well versed in delaying policy changes with tactics like concern-trolling and endless “suggestions” and additional “comments”. .
Doing nothing is the worst option, and frankly, business owners are in a far better financial position to bear the burden than workers who already have nothing to sell but their labour. If the burden falls disproportionately on businesses and CEOs, we say, good. That is their job in the first place!
In truth, the RM1,500 minimum wage is only the beginning. Malaysia’s workers need our institutions to be strengthened to ensure our economy continues to progress and grow. We need to guarantee the rights of workers to organise collectively and demand their rights. We need stronger labour unions and organisations which represent and protect their interests. We need better, more accessible and transparent labour courts and investigators who are willing to look into and punish companies for their misdeeds and crimes against their workers. Only with such comprehensive protections can we ensure that a fair share of Malaysia’s wealth ends up in the hands of those who create it: the workers and the marhaen.
As we move away from the failed neoliberal policies of the last 40 years, which have left our economy stagnant and uncompetitive compared to our neighbours, we must move away from our tradition of listening excessively to the perspectives only of business owners. It is long past time that we listen to and honour the voices of the workers who actually create value in our economy.
Vincent Loh Xue Yan
Parti Sosialis Malaysia (PSM)