Minimum Wage: Moving Malaysia Backwards

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FACULTY OF BUSINESS AND ACCOUNTANCY
University Malaya
CSGB6101 Human Capital Management
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In the late 2010, the issue of a minimum wage policy has been debated in Malaysia after nationwide picketing organized by the Malaysian Trade Union Congress (MTUC). Prime Minister Datuk Seri Najib asked businesses to embrace “fair and equitable” wage as part of strategy to make Malaysia a high income nation. In this study, it is debated on why a minimum wage policy should not be implemented, and implications of its enactment.| Minimum Wage: Moving Malaysia BackwardsGroup: Chua Siang Cher, Lance CGA090035Gan Chai Yee, Amelia CGA090033Chen Khong Ling CGA110039Abbas (Arad) Toushkan CGA100085| Semester 1, 2011/12| Lecturer: Assoc. Prof. Dr. Angeline Tay|

Purpose of this document:
* This document provides an outline of the wage context in Malaysia, and opines a market forces policy.

Sections of the DocumentPage
* Executive summary 3
* Introduction4
* Overview of minimum wage of minimum wage in Malaysia5 * Literature review
Definition and objectives of minimum wage6
Empirical evidence on minimum wage7
Weaknesses of minimum wage8
* Discussion 13
* Conclusion 14
* References

Executive Summary

Recent headlines like Occupy Wall Street which protest against the 1% elite of the world monopolizing the world economy and setting the business rules has got the world’s attention on income inequality. The minimum wage policy is always keenly debated as a tool to address the income inequalities in the labor market between the low and high-income groups. The debate of minimum wage in Malaysia heated up recently, with both labor interest group and employer interest group lobbying the government on behalf of their own agenda.

Objectives of the minimum wage include giving the unskilled a fair wage and a chance to live a dignified life. It also reduces the opportunities for abuse and exploitation. Various studies were conducted on the policy of minimum wages. It is found that a minimum has many negative effects on the economy. It stunts academic development, increase unemployment, reduce competitiveness and reduce the quality of life through inflation. A lot of the time, minimum wage policy just fails to achieve what it is set up for.

The developing status of Malaysia makes it tricky to decide for or against a policy of minimum wage. In view of its huge illegal immigration problems and its quest for a high income nation, it is opined that wage regulation should take a back seat for now in favor of alternative measures of boosting its citizen’s quality of life.

Introduction
The current economic crisis and impending doom of the European Union has got the world focus on the functionality of money markets and its regulations. It is unfortunately that this focus does not address fundamental issues of economic growth. Recent headlines like Occupy Wall Street which protest against the 1% elite of the world monopolizing the world economy and setting the business rules has got the world’s attention on income inequality. Recent research also suggested this income inequality leads to enduring deficiency of consumer demand and impair economic development (Fitoussi & Saraceno, 2010, Onaran, Ö. 2009, Horn et al., 2009).

Wages policy is a hot debate worldwide now due to the limelight received from Occupy Wall Street movement. The massive protest has also inspired 1,500 countries globally to fight income inequality. It is a huge global problem, caused by the difference between two models of economic growth. Firstly the credit-based model, where economic growth is stimulated by consumer demand likes the United States which is a high income country with a stable dollar. The second model is the...
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