Announcement

Ministry of Human Resources will be organising Minimum Wage Laboratory Exercise with the collaboration of World Bank on 8 to 14 February 2011 at Putrajaya International Convention Centre (PICC).

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Y.B. Minister Prelude

Ladies and gentlemen,
Salam 1Malaysia,

In line with the "1Malaysia: People First, Performance Now" concept, the Government, through the Ministry of Human Resources, is conducting a feasibility study on implementation of a national minimum wage for private sector workers in Malaysia. The study is also in tandem with the government’s vision towards realising a new economic model founded on high-income economy and improving the living standards of low income households.

Undeniably, there are Malaysians who live below the poverty line income level (PLI) as many workers earn wages less than RM750 per month. Analysis of average wages offered by employers participating in the ministry’s Fast Track Programme from October-December 2009 is shown in the following table Fast Track: Average Wages and Allowances for Local Workers According to Manufacturing Sector Sub-Industry

It is noted that the average wages for five manufacturing sub-sectors i.e. Electric and Electronics, Furniture, Plastics, Gloves and Textiles was RM626.76 per month for basic wages and RM762.20 per month for gross wages including fixed allowances.

These lower income groups, especially in urban areas, are facing hard times to make their ends meet due to ever-increasing cost of living, particularly on the back of price hike in daily necessities. The minimum wage regulation should be at least able to lessen the severity of their hardships.

However, some quarters argue that the setting up of the national minimum wage would lead to negative consequences as it could distort market forces. In addition, the minimum wage could also cause job losses in lower occupation categories where demands still exist for vulnerable groups especially for those working in rural areas. This in turn could result in higher unemployment rate for the country.

We have provided several useful website links for your further references on the minimum wage implementation. Do click them.

We welcome your views, opinions, ideas, suggestions and comments to provide us with better insights in formulating policies and strategies pertaining to the minimum wage. Such feedbacks can be channelled via this blog or by e-mail at gaji_minimum@mohr.gov.my.

Your invaluable input is very much appreciated. Thank you.

Datuk Dr. S. Subramaniam
Menteri Sumber Manusia







Monday, March 22, 2010

Minimum Wages

The ILO has defined minimum wages as “the lowest level of remuneration permitted …
which in each country has the force of law and which is enforceable under threat of penal or other appropriate sanctions. Minimum wages fixed by collective agreements made
binding by public authorities are included in this definition.

A national minimum wage is determined by government or a tripartite committee consists of representatives from government, employers and workers. Most countries adopt this model and is categorised into two: i) a uniform national minimum wage rate or ii) multiple national minimum wage rates for different sectors/ regions.

3 comments:

  1. Minimum wage is implemented in many developed countries and it didn’t cause any problems or scare investors away like others has pointed out and afraid of. Often, when it comes to companies not able to cope in a weak economy, it is not that companies are unable to pay employees but rather weak sales compounded by escalating debt and interest. Thus, the right thing to do in a weak economy is therefore not saying “no” to minimum wage but rather to help SMEs see through the times by helping them with financing.
    However, if a minimum wage is set at an unreasonably high level, it could have a negative impact on business. In light of rapid globalisation and the attendant increasing competition for foreign investment, broad-based minimum wage regulation is seen by many in Malaysia as more of an impediment than a necessity. The present trend in Malaysia for allowing market forces to determine the appropriate scale of wages looks set to continue.
    Undeniably, minimum wages could guarantee minimum income of family and increases the standard of living for the poorest and most vulnerable class in society and raises average. The minimum wages should set up according to living wages ,generally it means that if a person working 40 hours a week, with no additional income, should be able to afford a specified quality or quantity of housing, food, utilities, transport, health care, and recreation. It maybe appropriate for this economic recession period as minimum wages will stimulates consumption, local economy by putting more money in the hands of low-income people who spend their entire paychecks.
    By simple rationale thinking would easily bring anyone to the conclusion that the minimum wage would benefit the majority of Malaysian working class. The point is that, under current circumstances, with the increasing cost of living, the workers in Malaysia need a minimum wage scale to lead a decent life instead of being pushed into poverty. This means the minimum wage would provide sufficient purchasing power to enable a worker to attain a basic standard of living.
    However, we need to come to our senses that we cannot simply expected that the minimum wage is the answer to all problems of wage inequality without revisions of other policies in place. Others has pointed out, there are some real issues and loopholes that can be exploited. The answer isn’t to do nothing about it, as it is socially unjust to have people not able to earn wages that could at least ensure three meals a day, and a roof over their heads, and pay for education for their children. Hence, in line with this all legislators should know therefore that implementation of minimum wage has to be in tandem with other policy changes so that we can all reap the most benefits from the system without hurting the economy. What we need are creative solutions to the ‘challenges’ that minimum wage poses, and not simply sweep it under the carpet by saying it creates problems. Of course it creates problems. Every policy no matter how good will always have some level of negative side effect. But the real question is on how to minimize it. So, to all Malaysian..please wake up and smell the roses..

    ReplyDelete
  2. Aresandran.J Executive Secretary,
    Malaysian Institute of Human Resource Management
    1. All HR Managers know that the primary pull factor for individuals to take an employment offer-is ' wages'. This is the first thing that individuals look for in a offer letter.It is not the benefits and this is the missing point in our Employment Act 1955.Therefore a regulation on this matter is timely and will jive well with the Employment Act;and what more after 55years since the Act came into being.And more so when 90%of the countries around the world is said to have minimum wage ,of one form or another .
    Therefore the Malaysian Institute of Human Resource Management fully support the Government and the Minister of Human Resources in this noble and timely endeavour to introduce minimum wage, as the Government is responsible and accountable for high quality of life for the 'Rakyat' and the achievement of the 10th Malaysian plan in transforming Malaysia into a high income nation.


    2. The knowledgeable ,Honorable Minister ,is also right when he mentioned that our model must be unique and suit to fit the country's economic situation and and the needs of the
    workforce and such will not include all sectors. The government as we know ,has introduced many programmes to raise skills of our workforce; including HRD and HRDF,
    Skill development programmes,support for SME'S and now the Part time Employment Regulations and etc to support the strategic initiative of the government,and
    therefore sectors access to these opportunities should be studied for the introduction of minimum wage.

    3.In introducing minimum wage the fundamental aspects of Human Resource Management in wage setting i.e. scales or range must not be neglected. Human Resource
    Managers know that wages are based on skills,knowledge and experience and therefore wages offered for a job always has a range. This gives opportunities
    for individuals and HR Managers to negotiate the appropriate wages. Such wide range also provides for flexibility during period of recessions and for regional diversities.
    Therefore this element should be considered in fixing minimum wage or minimum range and also such element will support the government's initiative to promote PLWS
    and part time employment.

    4.Certainly the sectors involved should be consulted and their present range of wages taken into consideration and incorporated to ensure a smooth transition from where
    we are and we we want to go.

    5.The introduction of minimum wage should not be seen strictly as a measure to reduce dependence on foreign labour as they have no direct corelation and is generally
    accepted that Malaysians do not like three "D' jobs. Also the plantation sector has minimum wage in their collective agreements and yet depends heavily on foreign
    labour.Therefore the issue of minimum wage requires a mind set change based on the country's economic situation and the needs of the workforce as mentioned by the Minister
    of Human Resource. In this regards an incident comes to mind; the matter of retirement age , the call for extension of retirement age was made ten years ago, and lot of arguments
    were made against it and it took a decade to realize its need. So is the matter of minimum wage.

    ReplyDelete
  3. Companies will certainly benefit from automated employee hiring system like offers.
    New hire onboarding

    ReplyDelete

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