Ng opines that mandating a minimum wage is neither the most efficient nor the most effective way to increase the salary of workers. — Bernama photo
KUCHING (March 16): The government needs to focus on attracting high value industries that offer high-paying jobs and ensure that Malaysians are trained and reskilled for these jobs.
In making this call, Small and Medium Enterprises Association of Malaysia (Samenta) president Datuk William Ng said focusing on upskilling Malaysians for higher paying jobs would work better than giving in to the frequent demand for higher minimum wage.
“There are other better tools such as the proposed Progressive Wage Model that can align salary increments with productivity and skills – a win-win for businesses and employees,” he said in a statement yesterday.
According to Ng, over 50,000 vacancies for engineers and technicians in Penang and nearby Kulim remain unfilled, although the industry is offering monthly salaries between RM3,500 and RM6,000.
“This is despite the best efforts of the country’s public and private educational institutions to produce these skilled workers.
“The industry has also consistently increased the salaries of workers, even before the establishment of the minimum wage system,” said Ng.
He said in 2010, Ng said the median salary for Malaysians was RM1,500, and by last year, this figure had jumped to RM2,600 – a cumulative 73 per cent jump.
“Unfortunately, our proximity to Singapore and the weakening of the ringgit resulted in many of our trained and highly skilled workers being poached by our neighbour.
“The same RM1,500 in 2010 would get you SG$635, but by 2023, that RM2,600 was only worth SG$765, or a mere 20 per cent cumulative increment when in reality, the industry has steadily increased pay by a total of 73 per cent,” he added.
As such, Ng opined that mandating a minimum wage was neither the most efficient nor the most effective way to increase the salary of workers; it was meant to be used sparingly, with the aim of raising the income for the lowest income earners.
“When done without a corresponding increment in productivity or business margin, it will hurt the increment and promotion prospects of more productive workers, and distort the labour market as businesses are forced to reduce jobs,” he said.
“Many SMEs (small and medium enterprises) are already paying far above the current minimum wage, and the Malaysian labour market is also highly efficient with employers who underpay seeing themselves out of business.
“Any increment in minimum wage will not only affect the lowest income earners, but will have a cascading effect on salaries across the board – an unnecessary risk when the market is already reacting efficiently to the supply and demand of labour.
“The job market has also changed significantly post-pandemic. The gig economy is now the norm, with one out of four Malaysians working in the gig economy, while another one out of four having a gig job on top of their day job.
“Our definition of job, workplace, and even wages are outdated.
“In other words, the minimum wage system is an outdated solution to an outdated problem,” argued Ng.