Minimum Wage Policy...View No. 1

LATELY, there have been plenty of discussions regarding the minimum wage implementation in Malaysia. I’m not a business owner but I feel imposing the minimum wage at this time is not the right step. The minimum wage concept is a double edged sword.

Let’s analyse the core issue here. The cost of living is rising and the salaries of the lowest earners are insufficient. Raising income sounds fine in this equation, but let’s not forget that what goes around actually comes around.

Opponents of minimum wage say that employers are greedy and only think of profits. To a certain extent, this is correct. Let’s get real. Entrepreneurs rarely sacrifice their own goals, otherwise they would have been running a charitable organisation.

Who are we to be so naive to think that manufacturers will not increase prices based on operating costs having risen? Look at the increase in the price of sugar and flour.

Malaysians should have learned by now that it actually helps provide the truly greedy entrepreneurs with the perfect excuse to increase prices.

I say perfect because unlike sugar and flour, nobody else but the employers know the true incremental cost as a result of increasing wages.

Let’s look at the impact of such incremental costs on businesses, and ultimately employees.

If we remember the days of the financial downturn, both employee numbers and working hours were reduced. The same will happen because the name of the game is controlling cost-revenue ratios.

Malaysia would be less attractive to investors simply because the cost of doing business would have risen again. We should not forget that these investors bring in cash as well as keep our citizens gainfully employed.

With minimum wage, a majo-rity would have better pay, but those in non-core areas would have to go because the cost of having surpluses now would become untenable.

Even worse, over time, these foreign investors could pack up and leave for lower cost countries where a good portion of the population can converse in English and command lower pay.

This leaves Malaysians with fewer job opportunities and when this happens the problem would extend to middle wage earners.

Worse, local workers will gradually be replaced by foreigners, whom I suspect would not fall under the jurisdiction of the Act because applying the minimum wage to foreigners would certainly kill off SMEs, unless businesses increase prices, and that puts us back at square one plus inflation.

The right manner of addressing this issue is to look into the causes, or to address the core areas of discontent.

I believe if we concentrate on providing reasonable public healthcare, housing and education to every Malaysian, we would’ve solved the problem.

Source from here...