Minimum Wage Legislation – Good or Bad for Business in Malaysia? Discuss.

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Generally, we can define minimum wage as a wage at a minimal level given by employers regardless any sectors, genders, qualifications, background and so on. According to the International Labour Organization (ILO), minimum wage may be understood to mean the minimum sum payable to a worker for work performed or services rendered, within a given period, whether calculated on the basis of time or output, which may not be reduced either by individual or collective agreement, which is guaranteed by law and which may be fixed in such a way as to cover the minimum needs of the worker and his or her family, in the light of national economic and social conditions. A minimum wage is introduced to “secure workers a reasonable standard of life as this is understood in their time and country”. Minimum wage legislation determines minimum amount of remuneration that needs to be paid by the employers legally. However, the minimum wage policy is not a guarantee of better things to come. It has to be matched with hard work, innovation and vigilance. The enactment of minimum wage legislation was first started in New Zealand in 1984. It was widespread to other countries where nowadays there are more than 90% of all countries throughout the world which have enacted minimum wage legislation or wage binding collective bargaining. The history of introduction to minimum wage in Malaysia was started by the Malaysian Trade Union Congress (MTUC) as a result of increase in the salary of government servants. They demanded the government to increase the wage of employees in private sectors by organising a nationwide picket throughout Malaysia. Their request to the government of Malaysia was to set a minimum wage of RM 900 including cost of living allowance of RM 300 so that it would benefits all the employees in private sectors in terms of it would rises their household income and to lessen the numbers of foreign workers by attracting more local citizens to fill up the positions especially the positions conquered by the foreign labours. The Prime Minister of Malaysia, Datuk Seri Najib Tun Razak has recently announced the national minimum wage for private sector on 1 May 2012. The minimum wage for Peninsular Malaysia is set at RM 900 whereas in Sabah, Sarawak and the Federal Territory of Labuan it is set at RM 800. The implementation of this new minimum wage policy will be done in six months after the minimum wages order is gazetted. The reason is to give employers ample time to make adjustments before implementing the minimum wage. This announcement has received many feedbacks especially from the union workers. They welcomed the implementation of national minimum wage, however they wanted the government to provide an allowance of RM 300 as cost of living allowance (COLA) for private sector workers. The implementation of minimum wage would benefit all the private sector workers. One of the benefits is it can improves their living standards of life and therefore it could increase their productivity and workplace morale. On the other hand, absenteeism in organizations occurs everywhere. It might happen because there is diminishing motivation to work due to morale problems. The implementation of minimum wage could help an organization to reduce the rate of absenteeism. When employees are motivated by a raise in wage, they will give better job performance. However, the organizations might need to provide more training for their employees. The percentage of crimes may also be reduced especially among low-level foreign workers. However it is only applicable to those who are employed. What will happen to those who are unemployed or be laying off due to the minimum wage implementation in a company? Not being gainfully employed, they live off the generosity of family and friends, secure public assistance, beg, work in the black market or become common criminals. They become burdens on society. Criminologist Dr P. Sundramoor-thy said some people...
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