Why the minimum wage should be RM1,800 today – not RM1,100

1
407
A workers' protest in Malaysia

Wishing all readers a Happy Deepavali and hope you are having a wonderful break. Some of you have asked for some thoughts on Budget 2018. Anil Netto looks at the minimum wage.

First thing, let’s take a look at the monthly minimum wage, which has been raised by a further RM50 to RM1,100, the second increase in the year.

But this is still way too low.

We owe a lot to Dr Mahathir Mohamad for helping to bring about regime change on the back of People Power. But his record on the minimum wage issue continues to be less than stellar, even after two decades.

Let’s flash back 20 years ago, to the situation in 1998.

The late veteran trade unionist K George recalled in an article he wrote for Aliran in 2007:

The sum of RM900 as minimum wage was proposed in August 1998 when Mahathir met the MTUC leaders at the meeting called for by him. At that meeting, Mahathir surprisingly maintained that RM900 was not enough for an average family of five persons to survive for a month. Instead, he proposed that the minimum wage should be RM1,200. His excuse for not implementing his proposal of RM1,200 immediately was the financial crisis at that time in Malaysia. But when the economy started to improve gradually, Mahathir left the scene in October 2003 without resolving the minimum wage issue. Read the full article here.

READ MORE:  Paltry minimum wage hike leaves workers stuck in low-middle income trap

So two decades later, after our economy has grown by so much, we are still stuck at RM1,100. That’s still below the RM1,200 figure that was proposed about 20 years ago! You mean to say our workers have been that unproductive?

But then our economy is now three times larger than what it was in 1998!

So is this sustained expansion in the economy all due to the brilliance of top management and little to do with workers’ productivity?

If RM900 back then was insufficient for a family of five to survive, now we have the Khazanah Research Institute saying that even RM2,000 a month will leave a household with little left over – if at all.

So what is RM1,100? Peanuts, especially if you take into account the effect of inflation since 1998. An online inflation calculator shows that RM900 in 1998 is worth RM1,300 today. And RM1,200 back then is worth almost RM1,800 today.

Bear in mind that in 2012, workers were already marching for a minimum wage of RM1,500. Back then, Penang under Pakatan Rakyat had a minimum monthly wage of RM1,100 (including allowances and cost of living but excluding overtime) for employees of state agencies and government government-linked companies, while Selangor’s was RM1,500 for employees of state government-linked companies. That was six years ago.

So, if you ask me, the minimum wage for Malaysia today should be at least RM1,800. This ties in neatly with what the MTUC was asking for last year. So I think that would be a fair estimate for an absolute minimum wage – though even that would be tough for most workers to manage on.

READ MORE:  Stop addressing minimum wage issue from narrow neoliberal mindset

We often hear the tired arguments that workers need to be more ‘productive’ and companies cannot afford to pay a higher minimum wage. Careful now. Just look at the exponential pay hikes of the top management in local companies and government-linked enterprises, never mind the jaw-dropping earnings of our cabinet ministers. (By the way, some of these government-linked enterprises are not very transparent about their directors fees, payments to their retirement funds, share option schemes, etc.) Are we saying that only the CEOs, directors and top management in Corporate Malaysia have been ‘productive’, but not the rank-and-file workers?

This then is why business is ‘slow’ in the country. With their low wage, many struggling Malaysian workers are unable to afford all those great products and expensive ‘affordable’ homes produced by local manufacturers and property developers. In the end, many of the same businesses who pay so little to their workers suffer from slow demand for their own products, homes and services. Self-defeating, isn’t it?

Let’s not short-change workers after all their hard work and toil. Give them a fair wage so that they and their families can live in dignity.

Thanks for dropping by! Apart from the views expressed in Aliran's media statements and the NGO statements we have endorsed, the opinions in other pieces published here do not necessarily reflect Aliran's official position.

Our voluntary writers work hard to keep these articles free for all to read. But we do need funds to support our struggle for Justice, Freedom and Solidarity. To maintain our editorial independence, we do not carry any advertisements; nor do we accept funding from dubious sources. If everyone reading this was to make a donation, our fundraising target for the year would be achieved within a week. So please consider making a donation of whatever amount you can afford to sustain Aliran. Please make payments to Persatuan Aliran Kesedaran Negara, CIMB Bank account number 8004240948.

And why not become an Aliran member or subscribe to our FREE newsletters.

1
Join the conversation

avatar
750
1 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
1 Comment authors
Radha Krishnan G Krishnan Menon Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
Radha Krishnan G Krishnan Menon
Radha Krishnan G Krishnan Menon

The govermentshould introduce Cola rather than having a minimum wage.The lower your pay the higher the Cola.Inthis way everybody wins