Labour market reform and the minimum wage conundrum

This article first appeared in The Edge Malaysia Weekly, on May 6, 2019 - May 12, 2019.

Shamsuddin: Employers are looking forward to the [minimum wage] subsidy

Solomon says RM1,100 is a far cry from any decent wage level

Other stories in the Malaysia Baru: One Year On Special Pullout

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One of Pakatan Harapan (PH)’s more notable election promises as part of labour market reform was to equalise the minimum wage between Peninsular Malaysia, Sabah and Sarawak at RM1,500 per month within its first term. The rate was to be reviewed every two years.

Suffice to say, no one appears happy, even though the minimum wage has been raised to RM1,100 effective January this year — the first step towards the RM1,500 goal — from the previous level of RM1,000 in Peninsular Malaysia and RM920 in Sabah and Sarawak.

Given that the manifesto also stated that the government would shoulder half of the additional wage increase to ease the burden on employers — for instance, the RM500 cost difference would be shared equally when the minimum wage is raised from RM1,000 to RM1,500 — the Malaysian Employers Federation (MEF) would like to see the promise honoured.

“When the government decided that the minimum wage should be set at RM1,100 throughout the country, the employers had to bear the full brunt of it. Employers are looking forward to the subsidy as they are currently faced with many challenges, especially when the growth in the country is not that encouraging and in fact, economies all over the world are also facing a similar situation,” says executive director Datuk Shamsuddin Bardan.

From the perspective of employees, the minimum wage is unsatisfactory, according to the Malaysian Trades Union Congress (MTUC). Secretary-general J Solomon says RM1,100 is “inadequate” and “a far cry from any decent wage level”.

The country’s economy has advanced since independence but “workers have been left behind, especially the Bottom 40% and Middle 40% groups, and have not been accorded their dues”, he adds.

The MTUC is also urging an evaluation of the industrial court process as it claims that there are “unwarranted technicalities” that are causing workers and unions to suffer hardship. Solomon maintains that this has resulted in poor representation and a higher cost of litigation, and makes it inaccessible to workers who want to present their case, which is contrary to social justice.

Nevertheless, both the MEF and MTUC agree that the PH government has vastly improved the interaction between labour market stakeholders.

“The Ministry of Human Resources has done commendably well in terms of seeking views from stakeholders,” says Shamsuddin, who notes that in the past, the National Labour Advisory Council would hardly meet with the MEF, but the parties have met four times so far under the new administration.

“Also, they are more transparent about labour law reviews and they are willing to discuss proposed amendments [with stakeholders]. Things like this never used to happen previously,” he adds.

Solomon applauds the MOHR’s decision to open its Putrajaya office to complainants on Tuesdays, and that Human Resources Minister M Kulasegaran takes the time to interact with workers and employers.

“A holistic labour law review has been initiated after 60 years. The process thus far is transparent and engaging tripartite partners. We now have the opportunity to put forward our proposals for amendments, which are in line with International Labour Standards,” says Solomon.

“One key component under the amendments is the setting up of an Employment Appeal Tribunal. When successfully implemented, it will be equivalent to the Court of Appeal [but] at a much lesser cost, dealing with cases in an expeditious manner.”