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BNM: Wage floor needed to reach high-income target

March 22, 2012
 (At long last, we are vindicated again! Well, the union leaders have finally made their case understood. It is so consoling and assuring to have heard the BNM assistant governor saying that minimum wage will be good to achieve higher income economy... At least for once, a senior BNM’s officer is willing to say it without fear of retribution, over what unionists and of late our Buku Jingga have been advocating to break the vicious cycle ‘of low-income and low value added enterprises’ trap. This is not a one-upmanship thing but this ‘circuit breaker’ is the sure way forward, painful in the beginning but therapeutic in the longer time line. Dr Dzul)
By Yow Hong Chieh (TMI)
March 22, 2012

Sukhdave said a minimum wage would nullify the price advantage foreign workers have over Malaysians. — Reuters pic

KUALA LUMPUR, March 22 — A minimum wage will be good for the economy and ensure Malaysia achieves its high-income nation goal, Bank Negara Malaysia’s (BNM) assistant governor said today.Dr Sukhdave Singh said a wage floor will force industries now relying on low-cost labour to move up the value chain and contribute to gross national income (GNI), “a necessity given where we want to go”.

“There’s been a lot said in the media about how it’ll erode our competitiveness, but if your competitiveness is based on providing wages that are very low then that’s the wrong economic structure…

“If our agenda is determined by low value-added industries paying low wages, we will not achieve that objective (of higher income),” he told delegates at a forum held in conjunction with the release of BNM’s annual report yesterday.

The forum, which took place at the Sime Darby Convention Centre, was organised by the Malaysian Economic Association (MEA) and Universiti Malaya’s economics and administration faculty.

Sukhdave also pointed out that a blanket wage floor would also eliminate the price advantage that foreign labour now has over Malaysians, creating greater job opportunities for locals.

Workers who get paid more will be able to enjoy a higher standard of living and thus be more productive, he added.

He stressed, however, that any increase in wages must be accompanied by higher productivity and better skills if Malaysia’s high-income target were to be met.

The minimum wage initiative, which had been slated to be announced this month, hit a sticky patch after small-to-medium industries warned that a mandatory wage floor would cause 80 per cent of active businesses to fold.

Pressure from employers has forced the government to return to the negotiating table although any delay will upset trade unions who have said that a blanket base wage was long overdue.

As many as 16 mainly-Chinese industry associations earlier this month called on Putrajaya to stagger the implementation of minimum wage and sought exemptions for certain sectors and micro-enterprises.

The associations, which are mostly made up of labour-intensive firms, also asked to be given between 12 and 18 months to implement the minimum wage, which is said to be set at RM900 for peninsular Malaysia and RM800 for east Malaysia.

But the Malaysian Trades Union Congress (MTUC), the umbrella body representing some 800,000 workers from 390 labour unions, had insisted that such demands were unreasonable as the wage floor will be reviewed every two years.

Analysts have said the prime minister may announce the minimum wage deal shortly before calling elections in a bid to win support from the low- and unskilled workers who make up 75 per cent of the workforce.

Datuk Seri Najib Razak said yesterday he may announce Putrajaya’s decision on the proposed minimum wage on May 1, in conjunction with Labour Day.

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2 Comments leave one →
  1. Black Arrow permalink
    March 23, 2012 1:19 am

    Bah! Najib is spineless and will always cave-in to unreasonable demands. He is always bluffing and can never be trusted to fulfill promises. Right now he only wants to win at the polls. Vote out this useless BN Govt who is only interested in holding on to power but not serving the rakyat. This is not a government for the underdog.

  2. jimmy chan permalink
    March 23, 2012 4:08 am

    The wage issue brings to mind the recent reports in the star and sun. China has 6.8million civil servants catering for 1.3billion citizen, whilst malaysia has 1.4million for 28million. Unable to find the logic or to reconcile the figures from both countries.

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