Minimum wage in Malaysia

Topics: Minimum wage, Wage, Employment Pages: 18 (6155 words) Published: November 24, 2013


A STUDY ON MINIMUM WAGE IN MALAYSIA: NEED FOR THE POLICY AND ITS CONSEQUENCES BY
MELODY OF SEA

INTERNATIONAL ISLAMIC UNIVERSITY OF MALAYSIA

16TH OF DECEMBER
2011

ABSTRACT
The salary that is earned by the citizens represents the social well being of the nation.As for year 2011 thirty percent of Malaysia’s population earn below RM700 while the poverty line income is set at RM720. The absence of the minimum wage policy results in drastic exploitation of citizens of Malaysia and the immigrants. This research paper is targeted to understand whether Malaysia needs an implementation of minimum wage policy by making a survey and comparison analysis through different articles.And most importantly the consequences of the policy . The research indicated that janitors and guards do not have enough salary to cover their day to day expenses. This paper recommends that the Malaysian government should implement a national minimum wage to reduce the problem of poverty and exploitation of low-skilled workers. It is hoped that this paper will initiate future research peraining to this field, considering other low-skilled workers and not just janitors and guards.

TABLE OF CONTENTS
Introduction4
Literature Review7
Methodology15
Discussion20
Conclusion23
References25
Appendix27

1. INTRODUCTION
Background Information
There has been growing debates concerning the minimum wage in Malaysia, with strong opinions from both sides of the arguments. In 1979 edition of their introductory textbook, William B. Aumol and Alan Blinder explained, “The primary consequence of the minimum wage law is not an increase in the incomes of the least skilled workers but a restriction of their employment opportunities” (p.47). On the other side of the debate, social activists, policymakers and other non-economists often argue for an increase in the minimum wage. Advocates of the minimum wage have included Franklin D. Roosevelt, Martin Luther King, A. Philip Randolph, Walter R. Reuther, Edward Filene, Beatrice and Sydney Webb. Finally, Malaysia took its stance and made its first legislative attempt at putting in place a national minimum wage on twenty first June 2011 .Introduced by Human Resources Deputy Minister, Maznah Mazlan in Parliament, and the National Wages Consultative Council (NWCC) bill was tabled for its first reading. Most significantly, the general public does not widely share the negative opinion of the minimum wage, according to surveys. What questions us, is whether there is a need for minimum wage, and if there, how effective it might be. Statement of the Problem

This paper will investigate on the need and the effectiveness of the yet to be minimum wage bill among security guards, janitors with its current value of RM720. The idea of having a national minimum wage in Malaysia has been proposed more than 12 years ago by the Malaysian Trades Union Congress (MTUC), when Tun Mahatir was still the Prime Minister, and has been continuously rejected, until more recently, the current prime minister, Datuk Seri Najib has stated in the Malaysia Budget 2011 speech “Businesses must embrace the minimum wage as a business strategy”. A minimum wage theoretically, is planned to affect the low-skilled workers such as janitors and security, who are paid with low wages which affect their standards of living. With a minimum wage in effect, they were supposed to be able to raise their standards of living and live a more comfortable life. Conversely, Orrenius and Zavodny (2008) and Ragayah Haji Mat Zin (2007) argue that the effect of a minimum wage may just put these low skilled workers out of employment because of economic conditions in country, putting the low-skilled workers in an even worse situation: unemployment. Research Purpose

This paper aims to investigate whether or not Malaysia is in need for implementation of a national minimum wage, based on the reviews of recent...

References: Anonymous.(2000).No staff, no skills, Business Asia, Vol. 32 Issue 14, p12, 4/5p
Card D., Krueger A.B., (1995)
Fox, L. (2006). Minimum wage trends: Understanding past and contemporary research.
Publishing Company
Ragayah Haji Mat Zin.(2007)
Saget, C. (2001). Poverty reduction and decent work in developing countries: Do minimum
wages help?
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