Minimum wage row splits workers, govt

Minimum wage row splits workers, govt
By Anil Netto

PENANG, Malaysia - A debate is raging in Malaysia over whether a national minimum wage policy would undermine the nation's competitiveness, discourage foreign investment and trigger unemployment.

The Malaysian Trades Union Congress, an umbrella for private sector unions, has threatened a nationwide strike if its request for a minimum wage is ignored. It had earlier proposed that the minimum wage be fixed in the range of 600-1,200 ringgit ($157-$316).

In an emotionally charged speech on Workers' Day, MTUC president Zainal Rampak told a gathering that a minimum wage is a worker's basic right and not a privilege. Some 4,000 workers present yelled ''we support'' when union leaders at the rally touched on the issue. ''After 43 years of independence, the issue of minimum wages cannot be ignored any longer,'' said Zainal. ''If Indonesia, the Phillipines and East Timor have passed legislation, why can't we?''

Neighboring Thailand too has a minimum daily wage: 162 baht or some 480 ringgit ($126) per month. Although many factory operators and entry-level blue-collar workers in Malaysia receive more than 500 ringgit ($132) monthly, many Malaysians take home less than the Thai minimum - among them, general workers and operators in smaller factories, guards working for private security firms, and plantation workers.

Analysts say the MTUC perhaps erred in strategy by not naimg a definite amount it was demanding as a minimum wage. That left it open for Prime Minister Mahathir Mohamad to pour cold water on the wage demand, as he latched onto the upper limit (1,200 ringgit or $316) of the range demanded. The premier said such a high minimum wage would lead to high salaries for all categories of workers and blunt the country's competitive image.

Mahathir said that if a worker earning 400 ringgit ($105) at present had his or her salary raised to 1,200 ringgit, those earning 1,200 would ask for a raise to 2,000, and others earning more will ask for even higher salaries. ''In other words, a high minimum wage will lead to a compound increase in wages and salaries which neither the government nor the private sector can afford,'' said Mahathir.

His concern was echoed by the Federation of Malaysian Manufacturers, which said that a minimum wage policy could work against those who are not highly skilled. ''A minimum wage will not reduce poverty but on the contrary can increase poverty rates when low-skilled workers lose their jobs,'' said the FMM in a statement. It added that such a policy could hasten the process of replacing lowly skilled workers with those who are more highly skilled since they would become more expensive. ''It will be more effective and to the best interest of workers and trade unions to focus on programs to upgrade skills,'' it suggested.

Sandra, 50, is a single mother who works six days a week from 8am to 6pm at a small bread factory on mainland Penang, in northern Malaysia. Her salary of just over 300 ringgit ($79) id whittled down to below that amount after statutory deductions. She lives in a congested squatter settlement in a dilapidated plank house, covered with corrugated aluminium roofing, which gets unbearably hot under the mid-day sun. With her retirement savings, she somehow managed to place a deposit for a 25,000-ringgit ($6,579) low-cost house, always scarce, and took a bank loan to finance the remainder. Monthly loan repayments alone come to 58 ringgit ($5.3). That does not leave much for food, transport, medical expenses and her son's education.

Sandra is not alone in a country where the official poverty line is set at 460 ringgit ($121). Even the poverty line is well below subsistence level - not enough for a worker to buy a house and raise a family. The stark reality is that, for many low-income Malaysians, owning a home of their own remains a dream.

Nowhere is the struggle for a minimum wage more pressing than in Malaysia's vast rubber and oil palm plantations. For decades, estate workers have been paid wages based on the number of days worked, the market price of commodities, harvested quantity, and other factors beyond their control.

Now many workers are putting their foot down. Their demand: 750 ringgit a month ($197 dollars), one month's annual bonus, and annual increments.

''To say that others would demand a proportionate increase (if a minimum wage is implemented) is to deny low-income workers a basic living wage and a right to basic needs including housing and medical treatment,'' says R Mohanarani, the coordinator of an Alternative Workers' Day rally near Ipoh city, north of the capital Kuala Lumpur. The rally called for a minimum wage, a five-day work week, 90 days' maternity allowance, housing allowances, free medical care and education.

''Basically, they (employers) want cheap labor and do not want to give up a share of their profits,'' adds Mohanarani. ''It's a matter of attitude.'' In a nation endowed with natural resources, she points out, there is no excuse for paying workers less than a liveable wage.

The daily-rated wage system for plantations is an unhappy legacy of the British colonial era, during which huge plantation firms were set up in Malaysia. More recently, however, Britain has shown that a minimum wage policy need not necessarily lead to higher unemployment. It continued to create thousands of new jobs despite the introduction of a national minimum wage on April 1 last year.

Activists here are irked when the government and employers say that any pay rise should be matched by increases in productivity. For them, the plantation industry in Malaysia effectively debunks that call. For years, plantation firms raked in millions of ringgit in profits and all the while, their workers' real wages remained stagnant. Plantation managers live in comfortable mansions while, not far away, their workers live below the poverty line in substandard housing, their children underweight.

One analyst here noted, ''If a firm cannot even provide a decent living wage to its workers - one that is enough to meet their basic needs - it has no business being in business.''

(Inter Press Service)
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