KUALA LUMPUR - Malaysia plans to introduce a national minimum wage
for its workers against stiff opposition from employers and manufacturers who
warn that such a policy would shut down nearly 200,000 small and medium
enterprise (SME) units.
Human Resources Minister Subramaniam Sinnapan has dismissed the
manufacturers' claims as "false and alarmist", but Prime Minister Najib
Razak appears rattled and has delayed an announcement until May 1. "I will
study the matter in-depth and make an appropriate announcement on Labor
Day," he was reported as saying by the 'The Star' daily on March 20.
The government is caught between having to shore up votes in an
election year, due to he held by the end of next year, and the meeting the
demands of manufacturers. Najib cannot ignore warnings by Malaysia's Employers
Federation that the closure of 200,000 SME units would mean the loss of four
million jobs in a population of more than 28 million people. Adding to the
pressure, the opposition-ruled state of Selangor declared a Malaysian ringitt
1,500 ($487) minimum wage for its employees, starting January 1. But Selangor
has had to set aside $97.5 million to assist state-owned companies that are
unable to pay the new wages.
"Four million of them earn less than $162.50 a month," said
Arulchelvam Sinnaiyan, secretary-general of the Parti Sosialis Malaysia, a
small but vocal party that has two lawmakers in parliament.
According to a United Nations Development Program country report,
Malaysia is one country in Asia that has a wide income gap, with the top 20%
people enjoying 70% of the wages and the bottom 60% earning 20%. A middle class
of 20% struggles to pay off loans on houses, cars and credit cards.
In the 2008 general elections, the bottom 60% of voters, many of them
SME workers, rebelled, choosing the opposition Pakatan Rakyat over the ruling
National Front (NF) in the biggest upset since independence from Britain in
1957.
The ruling NF government wants to fix minimum monthly wages at $292.60
for SME workers, but manufacturers say they are already struggling to stay
afloat on a profit margin of 3-6% and will lose out to competitors in Asia,
especially China and India.
The country is trapped in a low-cost economy and has to move out to
higher skills and higher cost manufacturing as neighboring Singapore did in the
past two decades.
But the biggest hurdle is the upcoming general election, whose outcome
can go either way. While Najib is popular, he has a lot of baggage carrying the
NF, especially corruption issues.
In the latest of a series of scams, a minister was forced to resign
after her family diverted funds meant to make the country self-sufficient in
beef production into buying plush condominiums and expensive cars.
Najib sees the four million SME workers as potential voters, many of
whom are struggling on wages that are way below the official poverty line of
$247 a month.
"A minimum wage of $293 is great news and shows how desperate they
are to win. It shows the power of our votes," said factory worker Muniandy
Ramasamy, 42, of Kajang, a city just south of the capital Kuala Lumpur. "I
can now take home a decent wage with that," he said, adding that while his
basic pay is low, he earns more by working overtime.
He also gets other incentives to take home $390, barely living wages in
Malaysia.
Najib has been giving "One Malaysia" aid to low-income
families totaling about $650 million and has promised more if the economy
improves.
"Giving minimum wages is a smart move considering the opposition
from employers ... it forestalls potential protests and wins him votes in the
crucial election," says Denison Jayasooria, head of the Social Strategic
Foundation, a government-funded entity.
"Employers have said before that they would rather die than agree
to a minimum wage policy, but Najib has to win them over," he told IPS.
Jayasooria said having a minimum wage policy would also help lift the
economy out of a low-cost morass. Many of Malaysia's neighbors have minimum
wage packages and use them as a social safety net to help lowly paid workers
manage in tough times.
These countries, including Thailand and Indonesia, plan to raise wage
levels to counter the widening income gaps and prevent possible political
upheavals. Labor advocates are already calling for minimum wage deals in
Cambodia, Sri Lanka and Bangladesh.
China, the world's manufacturing hub, is raising its minimum wage by
13% in stages over the next five years.
A minimum wage policy is one of Najib's most important reform planks.
He needs to convince SME workers that the government stands for them and not
just for the rich, powerful and well connected.
Baradan Kuppusamy
Asia Times
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