KUCHING: In response to the election campaign promises by both political coalitions in May 2018, the Malaysian Trades Union Congress (MTUC) Sarawak has welcomed the much needed increase in minimum wage (MW) provided that it be based on sustainable economic policy and the labour market.
In a press statement issued here, the Chief Executive Officer of Sarawak Bank Employees’ Union Andrew Lo said that the minimum wage must be recommended by the Minimum Wage Council after taking into account the relevant socio-economic factors. “It (increase) must be based on sustainable economic policy and labour market, not at the whims and fancies of politicians. Workers rights must not be hijacked by politics.
“The MW has been calculated based on formula adopted by all parties of the Minimum Wage Council and it took into account relevant factors based on best practices and the objective of the MW policy. The factors are poverty line index/average household income earner, employers ability to pay, cost of living, productivity growth, and unemployment rates.
“It is therefore imperative to ensure sustainability that the MW formula calculations should be consistent and reflect the relevant values,” said Lo. He added that as mentioned in the 2012 NWCC report, “During the past decade productivity of growth as far exceeded wage growth. In order to become a high income economy with inclusiveness, the Malaysian government has decided to implement a minimum wage policy.”
For subsequent review, it was crucial to ensue that the actual productivity growth be used, not average value of 1 year. Using only one year value will distort the productivity and cost of living element in setting the minimum wage. It will further drag wage increase to lower than productivity growth. It must be noted that one of the impetus to implement a minimum wage policy was wages growth has lagged behind productivity growth in Malaysia as reported by the World Bank.
“Since this is a review of the MW, not the first implementation of the MW the productivity and the CPI figures should be computed on cumulative increase for the period since the last study i.e. for 3 1/2 years taking into account the 1 1/2 delay.
“The same rational also apply for the CPI element. “Currently the MW is lower in East Malaysia only because employers in Sabah & Sarawak have been paying lower wages the past decades. While the aim is to have a uniform rate, this should be achieved on a gradual basis.
To insist on a uniform rate now will risk adopting a lower rate at the detriment to workers in West Malaysia which make up 70% of the total workforce,” explained Lo. He said that uniformity would be achieved by the next review given the converging data.
“Again given the data, we should achieve a MW of RM1,500 much earlier than Pakatan Harapan’s manifesto of 5 years as there is compelling data and based on the above formula to support a MW for Peninsula Malaysia of at least RM1,300 and RM1,200 for Sabah, Labuan and Sarawak effective immediately and without any adverse impact on unemployment, investment and business competitiveness.
“Again, please avoid politics in setting MW. The World Bank and ILO has cautioned against setting the MW based purely on politics,” said Lo. He also urged employers to stop the repetitive and tiresome fear mongering.
