How price hikes hurt workers

A progressive mindset would dictate that the government ought to move the nation towards a living wage system

Why are we importing fruits that can be grown locally? - ANIL NETTO

When prices of basic nutritional food items – such as vegetables, fish, chicken, eggs and even a loaf of bread – soar, what is cause for concern is the plight of the marginalised in society.

If the prices of ikan kembong (Indian mackerel), sayur sawi (mustard leaves), eggs and a loaf of bread rise, it translates to an erosion of the disposal income of workers. A 20% rise in prices of essential nutritional food means 20% less in the workers’ income to meet other financial commitments. The poor become poorer!

So what ought to be done?

Some have said there ought to be greater government intervention to introduce a price control mechanism, not only during festive seasons but as an ongoing process. We do not think that view needs any contradiction from us.

Though economists argue against it, ostensibly on the premise that market forces ought to determine the supply-and-demand impact on food prices, we are fortified that it is a misplaced argument given that the most vulnerable segment of our working population are enslaved in the low and middle-income wage trap.

A 2018 Bank Negara study found that a single worker living in the Klang Valley needs a monthly living wage of RM2,700 – which is grossly below the country’s minimum wage of RM1,200.

Professor Yeah Kim Leng of Sunway University Business School has said that, based on the current minimum wage of RM1,200, a worker needs to seek supplementary income by taking on an additional job. And that is the reality.

Thus, it is obvious that the government has the choice of:

  • continuing to enforce price controls and providing subsidies or
  • migrating from a minimum wage system to a living wage module of wage administration, with the Bank Negara study as a benchmark
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While the first option may well provide short-term relief to the people, a progressive mindset would dictate that the government ought to move the nation towards a living wage system of wage determination.

Without such a shift, our hopes of becoming a high-income nation may remain just a dream.

K Veeriah is secretary of the Penang division of the Malaysian Trades Union Congress

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