Is Minimum Wage at RM1,050 (in 2019) Fair?

Putrajaya has fixed the new minimum wage nationwide at RM1,050 or RM5.05 per hour for 2019.

MTUC Secretary-general, J Solomon commented the increase of RM50 was a “pittance” dumped on labour. The National Wage Consultative Council (NWCC) recommended RM1,250. Of course, employers are delirious with joy of this “insult to the 14-15 million labour force in Malaysia”, said Charles Santiago, the Pakatan Harapan (PH) Member of Parliament for Klang. The next two reviews will happen only in 2020 and 2022. It is impossible to raise the minimum wage to RM1,500 as pledged by PH, if increments are RM50 every two years. Under BN previously, there was a 24-month delay in the review and consequent adjustment of wages.

If we account for what was supposed to be secured under the previous Government, then the total minimum increment has to be RM150, which then translates to a nationwide minimum wage of RM1,150. That is not fair but at least it’s progress towards RM1,500. In this whole episode, the PH Government has not laid out the impact of this incremental increase on businesses. Meanwhile, “fat cats” (pardon the cliché) CEOs earn more than RM1 million a year. Can’t we tax them on super earnings tax (of 35%) and fund the poor, the B40? Or, is this capitalist system led by unbridled greed.

So, what is fair? An Indonesian odd job worker (with some skill) earns RM140 per day. That on a 5-day work is RM700 per week or RM2,800 per month. Try asking him to work for RM55 per day! We pay more to foreigners than Malaysians!

Again, what is fair? It has to be RM1,250 as recommended by NWCC. Otherwise, why consult them? Bank Negara Malaysia has indicated that the living wage (as opposed to minimum wage) in Kuala Lumpur for a single adult is RM2,700. We are nowhere close to that.

The key policy issue is, are we aiming to be a low-wage economy? We cannot compete with the likes of Vietnam or China. So it is best for us to up-skill workers in manufacturing, construction and agriculture. Automation, innovation and AI is the way forward.