Some recent supply of magic potion arguments against minimum wage demands a response. Shamsuddin Badan, executive director of the Malaysian Employers' Federation (May 4), stirs the cauldron of supply and demand as though it will feed workers a panacea. "[#1]Employers against any minimum wage[/#]", (May 4)

By invoking the "force of supply and demand [as] the best way to determine the wage rate", perhaps he also hopes to inflate his ideas with an air of final authority, so that his words are justified by the absence of questioning. The force, however, is not just with supply and demand. We must question whether this potion is really that good.

But let's first be clear and firm: people are not things. In setting the prices of things, market forces generally do a fine job. But when supply and demand have the final say in determining wages, the people who work for those wages do not always get what they deserve.

We cannot rely solely on market forces to price the value of work properly or fairly. It's not that markets are not perfect - they never are. No, the point is that there is much more than the market.

The labour market is unique, and supply and demand only embody the basic, abstracted workings of wage-setting. Two elements are neglected in supply and demand: power and welfare. The two do not make a happy marriage, for more power on one side usually means less welfare on the other. See (and feel), the issue is slimy and spiky, not nice to touch.

I suspect Mr. Shamsuddin ignores the issues of power and welfare not because he is not cognisant, but because he loathes the consequences. It is more convenient to assume there are no power relations, and that the wage settled through market forces automatically guarantees worker welfare.

If I were still in first-year undergraduate economics, I might be persuaded that supply equal demand equals best, and that minimum wage must necessarily cause unemployment and less investment and other economic ailments. But, gladly, I have moved on.

Maybe my perspective changed when I noted that women are paid less than men; but however imaginatively I drew my supply and demand graphs, they flatly couldn't explain the phenomenon.

Supply and demand assumes that the worker happily agrees with the wage he or she receives; it does not consider that he or she might have no power to ask for a fair amount. Odd omission, isn't it? (But how much can a first-year undergraduate mind handle?)

In the process of discovering what's missing, I've grown grateful that glossy classroom teaching has become the breeding ground for the scepticism that now makes the world look much more complex and interesting. And more real, too.

I find it a striking reality that Malaysia still has not committed to ensuring a minimum level of welfare for workers. For sure, this is not surprising, for the poorest, who need minimum wage most, have least power to get it.

In this sphere, though, society and its laws can avail for those in need. It is also very real that decisions in the social interest do not make everybody happy. The large number of workers in Malaysia deserve to be granted a minimum wage law, even though opposing ranks will be peeved at a change to the status quo.

It is time for Malaysia to take a bold step, to implement a minimum wage. The act of abiding by minimum welfare is no different from swearing by supply and demand. Both are a matter of being consistent to a motive. However, in principle and practice, to enact a minimum wage is better than unleashing the market. It reflects a fair and progressive society.

The principle underlying minimum wage is difficult to dispute; hence, the scantiness of arguments against the ethics of this policy. But practical concerns predominate, as usual, and for the valid reason that adherence to minimum wage legislation must be feasible if it is to benefit our society and economy. Many objections to minimum wage legislation have been raised.

Some say that only a few workers will benefit. Well, excellent! This means that most workers are being paid above subsistence level. Of course, we must check if this is true. More importantly, we must be concerned that workers are paid at least to subsist not just now, in a phase of recovery and growth, but also in future downturns of specific industries or the whole economy.

Pressure on wages to fall will certainly emerge at some stage. It is in hard times, when demand for labour falls (graphs might be useful here), that a minimum wage law is most needed to ensure continued welfare and to prevent mistreatment of workers.

The recent crisis has revealed how, partly under the guise of flexible wages, workers have been made vulnerable. For its extolled virtues, wage flexibility is most appreciated by employers when wages stretch towards the floor, not the ceiling.

Downward flexibility can push people below the level of sufficiency. Some companies employ workers below subsistence hourly wage rates, compelling them to work overtime. When markets flounder and they suddenly cannot sell as much as planned, they cancel overtime work, and impoverish workers who cannot support themselves and their families on normal working hours.

The burden of adjustment to tumbling product market conditions, financial downturn, bad management decisions, even ill-conceived government policy, very often becomes foisted on workers who have no part to play in bringing about these problems.

But even in good times, when productivity is the foremost concern, minimum wage cannot be sidelined. In theory, workers are paid according to the amount they produce. This is good, this gives incentive to work harder. Nonetheless, there is still no guarantee that the minimum wage will be paid.

Surely a minimum wage can be coupled with a productivity-based metre, to ensure that workers who do the work that is required have sufficient income to lead a healthy life. Those who produce in excess of expectation still get rewarded for their industriousness.

The reasoning that, with implementation of minimum wage, all employees will have to be paid more, is a gross affirmation of existing wage disparities. This is as unsavoury as the idea that minimum wage must cause unemployment, which is tantamount to saying that some workers must be fired, and there are no alternatives.

Malaysia, where the richest 20 percent earn more than 50 percent of total income and the poorest 40 percent earn just above 10 percent, could improve its record of income distribution. Adjustment, of course, will have to be made, and where necessary the government should take steps to retrain workers.

This should be accompanied by a difficult but necessary step, that is, an explicit commitment to enforce the law and exhortation to companies to abide by the law.

The Malaysian public, on its part, should be made aware of the reasons for introducing these changes, so that those earning wages above (and way above) the minimum do not demand unreasonable increments. Have I mentioned that these are bold steps?

Our economy will also have to adjust to its waning lustre as a destiny for certain types of investment. We all know that investment is important, and whenever the spectre of declining investment because of increasing wage is raised, people shudder. This is a popular line of argument, quite an effective scare tactic.

But, hold on, aren't we supposed to be advancing and becoming more sophisticated? Isn't Malaysia already progressively losing its low-cost advantage? Aren't we supposed to be concentrating less on low-wage industries and moving towards higher-wage, higher-tech production?

In many surveys of criteria for deciding to invest in a country, investors have indicated economic growth potential as the first factor, followed in similar measure by socio-political stability, infrastructure and labour cost. If we concentrate on developing a highly skilled labour force, in the long term, investment will still come in spite of some increase in wages.

Obviously, the actual minimum wage level has implications on all I've said above. On this note, I must briefly add that the process of determining the minimum must be conducted with objectivity and integrity.

So fair, so good?

Lamentably, magic potion economics is quite powerful when conjured up to justify continuing the status quo. Malaysians must not allow, in our minds, the tyranny of mysterious market forces that swing us in circles of logic that entice us to believe that wages are fair because supply and demand have met, because they only meet where wages are fair and they are fair because supply and demand criss-cross.

This might be true sometimes, but certainly not always. As long as there are powerless people earning wages below subsistence, Malaysian society should uphold its right to welfare and livelihood.

There are kind and cruel employers, fat and lean phases, fair and unfair wages. To remain sober and judicious through all these conditions, it's best to avoid the intoxicating vapours of magic potion economics and focus on making minimum wage work.

Above all, a commitment to minimum wage marks a step forward in economic development - in principle and practice. It's a shame when Malaysians who live, or long to live, life to the maximum, neglect those who live by the minimum.

LEE HWOK AUN is pursuing a master degree in political economy at the School of Oriental and African Studies, London.