News on Minimum wage by MEF in the New Straits Times today. I am in the process of writing an article to refute the claims of the MEF
KUALA LUMPUR: The Malaysian Employers Federation (MEF) is sticking to its stand that a minimum wage system will hurt local businesses and workers as it tends to benefit low-skilled and low-income foreign workers.
Executive director Shamsuddin Bardan said the way to push for higher income levels was not by basing it on a minimum wage but by increasing employee productivity and performance.
"A minimum wage will only benefit foreign workers, resulting in more money being remitted out of the country," he said.
He was responding to Human Resources Minister Datuk Dr S. Subramaniam's announcement on Sunday that a minimum wage is likely to be introduced by the middle of next year.
Dr Subramaniam had said the minimum wage would cover most jobs in the private sector, with some variations based on geographical locations.
Shamsuddin said Malaysia should look at adopting the wage systems of other developed countries such as Singapore's which practised a flexible wage system of 70 per cent fixed pay and 30 per cent variable pay.
He said such a system was dependent on the individual's performance and rewarded workers according to the value of their jobs, their capabilities and contributions.
"This wage system also gives businesses the flexibility to make adjustments to wages during an economic downturn and not force them to retrench workers," he added.
Shamsuddin also cited Sweden's time bank system which allowed businesses to retain workers and avoid retrenchment.
The time bank in principle allowed the employer to deposit a "credit" to the individual employee's benefit in terms of time off from normal working hours which the employee could choose to draw on as he chooses.
"The additional work done during better times is put into the worker's time account as a 'credit' which can be drawn during a downturn.
"This enables the workers to still draw their salaries even when productivity is lower."
Shamsuddin said that if Malaysians expected higher incomes, they should be willing to upgrade skills.
"The problem here is that people who start out with Sijil Pelajaran Malaysia certification remain with the same certification throughout until they retire.
"If we upgrade out skills, employers will be more willing to retain workers with outside investors more willing to invest in those companies due to the high skills available."
Malaysian Trades Union Congress (MTUC) president Syed Shahir Syed Mohamud said it was not enough for the government to say that it wanted high-income levels if it did not have a clear plan on implementing a minimum wage. He urged the government to upgrade the salaries of those earning below RM900 a month.
"For those who are already earning more than RM900, it's not an issue but this RM900 minimum wage must cut across all sectors in all states."
Syed Shahir also said the government should not confuse minimum wage with take-home pay.
"The minimum wage must be based on the typical working hours put in as per the law which is based on eight hours, five days a week shifts," he said.
"It's sad when you hear of workers asking for an advance from their company to be able to celebrate Hari Raya. When people don't even have enough to spend for their festivities, it's clear that more needs to be done to improve the income levels in the country."
Prime Minister Datuk Seri Najib Razak, in a recent interview with Martin Soong on CNBC Conversation, said that the government would put in place measures to ensure the wage structure in Malaysia was commensurate with the true value of talent.
He had said that this was among measures to be taken by the government to attract Malaysians working abroad.
He had also said that the government would make some important announcements shortly in respect of the establishment of the Talent Corporation which would get Malaysians abroad to work here.