Malaysiakini Letter

Increase minimum wage, then implement GST

S Arutchelvan  |  Published:  |  Modified:

Parti Sosialis Malaysia (PSM) urges the government to immediately ensure that the minimum wage - RM900 for the peninsula and RM800 for Sabah and Sarawak - be immediately increased between RM1300 to RM1500, when the minimum wage is meant to be reviewed this year.

This increase must take place before the government implements the Goods and Services Tax (GST) in April this year.

Currently, in spite of the massive price hike experienced by many people - especially the lower income group - and added on with the worst flooding experienced by the nation, the government of the day is adamant to implement GST on April 1, 2015.

The implementation of GST is going to create massive hardships for Malaysian workers, such as increasing the price of goods, increasing the income gap between the rich and poor, and reducing purchasing power.

All this will further slump the economy, which is also faced with the plunge in global oil prices, worsen the weakening of the ringgit and create a sharp drop in Bank Negara’s foreign reserves.

The New Economic Model (NEM) was reported last year as saying that 80 percent of households earned less than RM5,000 a month, 40 percent less than RM2,000, whereas 78.6 percent of Employees' Provident Fund (EPF) subscribers earned less than RM3,000 a month. Every report also continues to show the widening gap between the rich and poor.

What is even more shocking, is that the government can be so firm in implementing GST, while at the same time deciding - very conveniently - not to increase wages and going back on its decision to make Malaysia a high-income society.

A Free Malaysia Today report on Dec 23, 2014 quoted Minister in the Prime Minister’s Department Wahid Omar as saying that Malaysia never intended to achieve the target of gross domestic product (GDP) paid out as wages to 40 percent, by 2020.

'Conveniently disregard minimum wages'

This is in direct contradiction with Prime Minister Najib Abdul Razak’s budget speech where he said that the share of GDP paid out as wages is targeted from 34 percent in 2014, to 40 percent by 2020.

It is because of this, that PSM feels strongly that the government will also conveniently disregard increasing the minimum wage, and will find numerous excuses not to do so. While the government has been making numerous announcements day in and out about the benefits of GST, there is total silence on the minimum wage which is due to be reviewed this year.

Meanwhile, PSM acknowledges that the lowering of fuel prices will help lower income workers, but it is in no way going to ensure that the prices of goods will decrease. There is no such precedent that the lowering of fuel prices will result in the lowering of prices for other items.

On the contrary, when the global fuel prices increase mid of this year, it will result in another price hike of general goods, as the government has now decided to abandon the fuel subsidy. The government's decision to do away with fuel subsidy will have enormous impact to the lower income group, as well as the economy.

If the super rich are properly and efficiently taxed, and if there are no leakages, then there is no need to implement GST as there would be enough for everyone.

Currently, billionaire club members' taxes are kept secret, while Malaysia is the world’s fourth highest as far as black money and illicit money is concerned, which amounts to a staggering RM1.21 trillion.

PSM urges for the government to increase wages first and stop implementing GST. Being selective in only implementing GST - but not increasing minimum wage - will only strengthen the fact that the government is only out there to help the super rich, but has no intentions whatsoever to help the majority of the people.

S ARUTCHELVAN is Parti Sosialis Malaysia (PSM) secretary-general.

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