Media Statement
4 Oct 2012
For Immediate Release
Pakatan’s Comprehensive labour policy reforms aim to uplift the nation
The BN Youth Chief clearly needs some lessons macro-economics. While Barisan Nasional Youth can tolerate corruption and wastages to the tune of billions but it is a crime from the BN Youth Chief’s point of view when Pakatan tries to improve workers’ share of national income so that they live a dignified life and contribute to domestic economy as consumers.
Perhaps it is a sign of the time that even Barisan Nasional MPs spend more time talking about Pakatan Rakyat’s Belanjawan 2013 than Prime Minister Najib Razak’s budget proposals.
The latest is Barisan Nasional Youth’s accusation that Pakatann Rakyat’s offering of a minimum wage at RM1,100 will bankrupt companies and ruin the economy. The BN/UMNO Youth Chief called Pakatan’s minimum wage promise “not realistic” and “brainless populism”.
Pakatan Rakyat made its commitment to implement a RM1,100 (total compensation) minimum wage in its 2012 Belanjawan in October 2011, ahead of Prime Minister Najib Razak’s announcement on 30th April 2012.
Why minimum wage?
1) The lack of a minimum wage policy, the dependence on foreign unskilled labour, and the resulting inability to automate and move up the technological ladder were the key contributing factors of a stagnated Malaysian economy since the 1990s.
2) Already in Malaysia workers’ share of national income is only 28% while in most developed countries workers share between 40%-55% of national income. There is clearly room to improve the workers’ share of national income.
3) Prime Minister Najib Razak had himself admitted that for Malaysia to continue to grow admist global crisis, domestic economy is the key. Only when workers can afford to consume that we would have domestic demand.
Why BN’s minimum wage is inadequate?
While Pakatan Rakyat welcomed the long overdue announcement of a minimum wage rate at RM900 for Peninsula Malaysia and RM800 for Sabah and Sarawak by Prime Minister Dato’ Seri Najib Razak in May 2012, Pakatan Rakyat had warned then that the effective rate amounts to no change in reality and the policy is implemented in a piecemeal manner.
BN’s minimum wage amounts to very little in reality. The most important finding that eventually convinced the Najib administration to implement the minimum wage policy was a Human Resources Ministry study that found a third of the workers were living with a wage of about RM700, below the poverty line.
The announced minimum wage rate of RM900 for the Peninsula and RM800 for Sabah and Sarawak is actually inclusive of allowances, which effectively means the basic wage is still between RM700 and RM800. This means, the purported changes were almost no change at all. Pakatan Rakyat on the other hand proposed a minimum wage of RM1100 (total compensation).
To be effective, minimum wage policy must not be implemented in isolation and in a piecemeal manner. Pakatan Rakyat recognises that a minimum wage policy that is effective must be implemented in a package holistically.
Thus, already in October 2011, Pakatan Rakyat in its Belanjawan 2012 proposed that:
a) a clear and determined policy to stop dependence on foreign unskilled labour which results in a “race to the bottom” in terms of wage;
b) a Facilitation Fund to be set up to help employers including those in the manufacturing and services industry to automate and to improve on technologies, provide tax breaks as well as other financial assistance, shall also be considered;
c) to provide for child care and other facilities to facilitate female participation in the workforce to tap into the total strength of Malaysian workforce.
A holistic policy framework, as proposed by Pakatan Rakyat, will mean more income and more disposable income for Malaysian workers, which will in turn boost domestic consumption and drive the growth prospect of the economy.
A final note, we would like Khairy Jamaluddin to join us to demand the Government to declassify the Confidential Report by the World Bank entitled “Optimal Deisgn for a Minimum Wage Policy in Malaysia” dated 28th July 2011.
The World Bank document shows that:
1) Assumming a minimum wage that is higher than RM1,000, the sub-sectors of the manufacturing of paper and furniture, food and beverages, plastic, glass, and transport equipment will see formal employment increasing by up to 1 percent. This increase in formal employment would be accompanied by a small reduction in informal employment.
2) A minimum wage of RM1,100 and up will see the sub-sectors of utilities, construction, trade, and accommodation and restaurants reducing both formal and informal employment for low-skilled workers, who are mostly unskilled foreign labour anyway.
3) Even if the level were set at RM1,200, high value-added services sectors would be least affected.
4) Even set at RM700 level, the low-end manufacturing sectors would still be adversely affected.
The talk of an additional RM200 in minimum wage would bankrupt the companies is simply untrue.
Chua Tian Chang, MP for Batu
Liew Chin Tong, MP for Bukit Bendera
Dr Dzulkefly Ahmad, MP for Kuala Selangor
