Did you know that our national, industry-wide minimum wage was actually introduced more recently than we expected?
The Malaysian government announced the introduction of minimum wages nationwide in July 2012, and the 2012 Minimum Wage Ordinance came into being in the same year. The law was then enforced on January 1, 2013. That was barely a decade ago.
At that time the minimum wage rates for West Malaysians were RM 900 / month and RM 4.33 / hour, while for East Malaysians they were RM 800 / month and RM 3.85 / hour.
What was before the minimum wage was appointed?
Previously, Malaysia only had the Wages Councils Act of 1947, which was introduced for workers who were at risk on low wages and who had inadequate collective bargaining.
Under this law, the government can set up wage councils for certain non-union sectors of the workforce, made up of representatives of the government, workers and employers, plus a maximum of three people.
These councils would discuss and submit proposals on wage regulation that the government can adopt in a regulation on wage regulation.
The wage rates of the unionized sectors of the workforce are then determined by a collective agreement and through decentralized collective bargaining under the Labor Relations Act of 1967.
As a result, 6 wage ordinances were enacted (and some were amended in the years thereafter):
- Catering and hotel
- Cinema workers
- Stevedores (a person who works at a dock for loading and unloading ships) and freight carriers
- Seller (Sarawak)
- Private security guards
To help you measure the minimum wage paid to workers at the time, movie theater workers in cinemas that normally show 4 films a day were required to receive RM 155 per month, and salespeople aged 21 and over were required to receive RM 250 each in certain cities Districts receive month according to the International Labor Organization.
Failure to pay minimum wage rates under the provisions of the Wage Ordinance may result in the employer being asked to pay the employee the remainder of what he should have paid and a possible fine of no more than RM 500 for each offense.
The realization of our national productivity has increased, but wages have not caught up
There have now been several setbacks under the Wage Council Act.
The process of setting minimum wage orders has been lengthy, lengthy, and ad hoc. The minimum wage rates have not been revised regularly and many other large workers have been left out as only these 6 have been established. In addition, the law did not specify how often the minimum wage rates should be adjusted.
In addition, the Ministry of Personnel carried out a national employment study in 2009 and found that 33.8% of employees in the private sector were paid less than 700 RM per month, compared to the Pendapatan Garis Kemiskinan (PGK) 800 RM, according to Prof. Siti Marshita from MMU, an expert in labor law, in her work here.
Additionally, the World Bank found that Malaysia's wages had flattened only 2.6% per year over the past 10 years, while productivity rose an average of 6.7% over the same period.
When the government found that Malaysians were not being paid fairly for their work and the increased cost of living, it decided to introduce a national minimum wage, starting with the establishment of the National Wage Advisory Council in 2011.
From there, the council was responsible for examining all aspects of the minimum wage, e.g. B. speaking with relevant stakeholders and learning from other countries in order to make recommendations to the government.
Once that was over, the minimum wage ordinance was finally announced and enforced the following year, setting a national, sector-wide minimum wage rate for all Malaysians.
Not everyone was happy, however
To help you estimate the value of the first minimum wage rate, back in 2013, according to the Malaysian inflation calculator, RM900 would mean RM 1,037.68 in today's ringgit value. So not that much of a difference, but not even close to our current minimum wage of RM 1,200.
Originally RM 1,200 a month was the amount requested by the Malaysian Union Congress, but the demand was later revised to RM 900, according to the New York Times, to meet the government midway through.
Although this was initially considered sufficient by the government and the trade union, the Malaysian Socialist Party did not share the same sentiments.
They gathered in KL demanding RM 1,500 a month and criticized the government for discriminating in setting different rates for workers in different parts of the country.
However, then-Prime Minister Najib Razak only replied that the different rates reflected regional differences in salaries and cost of living.
Some of the employers opposed the payment of the minimum wage as it would reduce companies' profit margins and some companies with a small number of employees could be forced out of business.
A lecturer in UM economics, Professor Terence Gomez, also said in an interview that the introduction of a national minimum wage could also harm customers if companies were to pass the increased export costs on to their customers.
"I see this as a political move rather than an attempt to solve the problem of unfair wages for workers," he said in an interview with the NY Times.
He added that these wages could be more beneficial to rural workers than urban workers, and that "rural voting puts the government in power".
The national minimum wage, of course, did not stay at this amount, as it has been changed three times over the years to come to today's 1,200 RM.
|West Malaysia||RM900 / month, RM4.33 / hour||RM1,000 / month, RM4.81 / hour||RM1.100 / month, RM5.29 / hour||1,200 RM / month, 5.77 RM / hour
(The increase only applies to employees of the city council or the municipal council.)
|East Malaysia||RM800 / month, RM3.85 / hour||RM920 / month, RM4.42 / hour|
Our minimum wage is increasing, but does it benefit everyone equally?
Although a national, sector-wide minimum wage cushioned wage inequality in the country, we are still fairly unfairly compensated for our productivity in most employment sectors, according to Bank Negara Malaysia’s 2018 annual report.
Malaysians are underpaid in most sectors of the workforce / Image Credit: Bank Negara Malaysia
As the number of college graduates in the market has increased, the actual minimum monthly base salary for freshmen has decreased.
However, the starting salary for people without a university degree has increased thanks to national minimum wage increases.
According to the BNM, this could indicate that our economy has not created enough high-skilled jobs to accommodate the number of graduates entering the world of work, resulting in 50% of those in low-skilled manual professions being overqualified for those professions, such as Khazanah notes research institute.
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The next time you hear someone criticize millennial or Gen Z adults for being “picky about” jobs, you'll be better informed as to why.
While it is good that our national minimum wage is rising and benefiting those who need it most (as it should), it is nonetheless important that similar protection policies are put in place before the problem of brain drain drives the country's economic growth impaired.
- More articles on salary can be found here.