Sunday, October 07, 2012

Minimum Wage of RM1,100 Burdens the Nation? Who's Right - Chua Tee Yong or Tony Pua?

Khairy Jamaluddin & Chua Tee Yong are opposing Pakatan's proposal to set the minimum wage rate at RM1,100 a month. Both the BN politicians are claiming that the minimum wage will add burden to the nation and people. These two politicians are definitely short sighted. 

A number of nations which have a minimum wage legislation and those who have seen their income per capita rising a few folds above Malaysia in the last 2-3 decades did not go bankrupt. In fact, Taiwan is a good example. It had disallowed low skilled foreign workers into the country since the late 80's in order to reserve more jobs for Taiwanese. 

Chua claimed that Malaysia has three million foreign workers and by giving an additional RM200 a month to these workers as pay, it will create an outflow totalling RM7.2 billion as they transfer money to their home countries. 

"If we implement the minimum wage of RM1,100, we will lose RM7.2 billion every year. The question is who will bear the cost of this RM7.2 billion? The answer is the rakyat!" 

Tony Pua argues that the Pakatan Rakyat’s proposed floor wage policy of RM1100 would not cause a RM7.2 billion annual capital ouflow, it would only reduce reliance on foreign workers. 

Tony is making more sense than Chua. This is precisely the intention of setting a minimum wage policy - to encourage local companies to think local when hiring and to enhance productivity. Enhancing productivity and relying on local manpower and talents are the only safeguard to guarantee our economic competitiveness. When Indonesia starts to create more jobs or when the Myanmar economy takes off full steam, the availability of foreign workers become scarce. 

It is evident that both Khairy and Chua do not belong to the new generation of leaders who are committed and keen to address the long standing socio-economic issue. We need a policy to help us address long term dilemma and over dependence on cheap labour to grow our economy. 

For this issue, it is clear which coalition is talking long term and which is merely being myopic and irresponsible.


Anonymous said...

Something is very very wrong in the heads of these employers and politicians who stubbornly refuse to right a pathetic situation which affect all the lowest rank workers who are usually struggling to live/support a family.These general workers most often eat roti canai/teh tarik or plain rice with curry for almost all meals to save enough for the family/children expenses.What can RM1k or lesser do these days when costs of living have gone up so high? These politicians/employers should learn to have a heart for these struggling poor families and don't always dream about greater profits every year!

Anonymous said...

We have to look at our economy, we are very different from Taiwan because our agrculture sector in particular are totally dependent on foreign workers. The current minimum pay and the current CPO price is going to kill this sector and even smallholders are suffering and what about the construction sector and threst of the labour intensive factories etc...

bruno said...

Khoo,first of all RM1,200 per month is no big deal today.Looking back at what RM600 can buy five years ago,only fools would say that RM1,200 minimum would add burden to the people and nation.Inflation is shooting through the roof,but people like Khairy Jamaluddin and Chua Tee Yong would not know the difference between a duck and an ostrich.

They are beneficiaries from people milking the economic cows till their tits turned purple and still milking the cows till they drop dead.One who has a FIL and one a father who are their sugar daddies and breast feeding them.

These two bigmouths Khairy and Chua Jr would be sucking the marbles of Umnoputras without their FIL and porno dad.For a country forecasted by their political masters to be a developed and high income nation by 2020,minimum wage of RM1,200 is chicken feed.Unless these buggers know that their political masters are talking c**k and the country is destined to be a member of the PIGG'S nation.

Jal said...

Personally I believe we should explore this further. Without solid economic facts and figures, its difficult to just shout out a figure like RM1,100. I would feel more comforted if PR can show me with proper calculations backed by economic facts on how they arrive to this figure.

As to this statement:

"A number of nations which have a minimum wage legislation and those who have seen their income per capita rising a few folds above Malaysia in the last 2-3 decades did not go bankrupt."

Could we perhaps have some examples of such countries? Are they European countries? If they are, a quick look at the unemployment rates in the EU as well as the current financial crisis which they are facing tells a different story. Bakruptcy may not have occured yet but underemployment can sometimes be worse.

I personally think we would be better off if we focus on our own economy and make measurements beased on our own economy. Perhaps other countries can afford RM1,100-level of minimum wage but maybe not ours? I believe we should explore further.

"In fact, Taiwan is a good example. It had disallowed low skilled foreign workers into the country since the late 80's in order to reserve more jobs for Taiwanese."

I personally am not too sure if this is a good example to follow. If minimum wage is implemented for foreign workers for sure as employers would be put off by having to pay the same genre of workers the same wages, but with additional costs of applying for work permits, visas, agent fees, etc. It will even itself out.

Sadly, I have reservations that Malaysian will be willing to work in oil palm plantations, for example. I can tell you from personal experience that Malaysians are less than willing to work at plantations due to the hard manual labor and the weather.

It is also very likely businesses will just past the cost on to consumers. Already I have personally witnessed some companies cease hiring and even letting go of existing employees by not renewing their contracts, and making the remaining employees make up the extra workload. If the remaining employees are unhappy, what can they do? Resign and try to find job in this economy?

I'm supportive of setting a gradual, progressive minimum wage executed over a period fo say 3 years, but not an immediate jump to RM1,100, at least not without very detailed study into the reprecussions and potential shocks to the economy.

By the way, love your blog. Love your writings. In a Malaysia where both BN and PR supporters bark blind support, it's very reassuring to read your articles which I find informative and neautral.