Pemandu CEO Idris Jala, International Trade and Industry Minister Mustapa Mohamed and Minister in the Prime Minister’s Department in charge of the Economic Planning Unit Wahid Omar had spoken on the issue of wage stagnation despite increased productivity and cost of living. The World Bank has confirmed that wages are below productivity level.
Attributing the wage stagnation to cheap foreign labour, Wahid said: “We don’t price it properly.” He also criticised employers’ attitude, saying that even during the minimum wage debate, they had complained. “If employers can be generous in sharing the spoils, we can increase the overall income level.”
The ministers, during the Economic Transformation Programme’s Economic Wrap-up 2014 last week, hoped the private sector would raise salaries in line with productivity growth.
While the Malaysian Employers Federation (MEF) says that countries such as Japan and the United States had seven times more productivity compared to Malaysia, and Singapore four times more productivity, MEF conveniently forget to mention that workers in Malaysia are paid more than four to seven times lower than in these countries.
The real reason why Malaysian’s productivity is lower than Japan, Singapore, the US, and even South Korea and Taiwan, is that the government has allowed employers to suppress wages by stifling trade unions until there is no economic incentive for employers to invest in technology and productivity to enhance methods of production
As such we are trapped in this low-cost and low-productivity model with 6 million foreign workers.
In Malaysia wages to gross domestic product (GDP) is only 33.6 percent. While in Singapore, it is 43 percent, Taiwan 46.2 percent, South Korea about 43.7 percent, Norway 51.3 percent, Australia 48.7 percent and Japan 51.9 percent.
There are studies that showed that for every Ringgit earned in Malaysia, employees get 28 sen, the company 67 sen and the government 5 sen; while in Singapore employees get 42 cents, the company 47 cents and the government 11 cents.
It is also patronising at best and fear mongering at worse to say that, “It is already good if bosses can fill employment in this current economy.” Some companies are already talking about retrenchments. It was also claimed that 600,000 businesses will go bankrupt if the minimum wage is implemented.
Then these businesses employ 6 million foreign workers - half the country’s workforce, claiming locals do not want to work, when in reality they offer low wages that are below the poverty line index. By doing so, all these wages will go out of the country, hurting the domestic economy and killing local business because workers just don’t have enough money to spend inside the country
Average monthly wage is still less than RM700
Even then employers groups, especially from the forestry and plantation sectors, are strongly against any increase in the minimum wage review. In fact Sarawak employers admit that the average monthly wage of 182,000 of the 258000 workers in the agriculture and forestry sectors is still less than RM700, which is below the legal requirement of the minimum wage of RM800.
They further state that 51 percent or half a million Sarawakian workers earn below RM900 which is lower than the poverty line.
Essentially what they are saying is that the minimum wage should not be increased because a lot of employers are paying below the statutory minimum wage of RM800. Is that not like saying that we should not increase the sentence for rape, because there are a lot of rapists?
To urge a wage moratorium just show that MEF and employers are out of touch with reality.
Even the British prime minister, who is a conservative and pro-business, is urging a pay hike. He said, “For us, business is not a conspiracy of runaway profits, depressed wages, inequality and unfairness. It is the best generator of growth, wealth, work and opportunity there is.”
So with ever increasing prices and continued suppression of wages, it is a matter of time that consumers will go bankrupt (household debts are already at an all time high- meaning a lot of our purchases are financed by debt - not real income).
The only way is to empower workers is to negotiate higher wages so that they can have enough money to spend to make businesses sustainable.
Business and employers must quickly realise that workers are potential customers to be cultivated, not people to be exploited. Otherwise they are really killing the goose that lays the golden egg.
ANDREW LO is secretary, Malaysian Trades Union Congress (MTUC), Sarawak division.