KUCHING: The Malaysian Trades Union Congress (MTUC) Sarawak expressed its “sadness” that business leaders in the country continue to cling on to antiquated policies and myopic views in opposing minimum wage increase.
“The Malaysian Employers Association (MEF) claims that minimum wage will derail economic recovery.
“We just want to point out that MEF’s persistent fear mongering of economic doomsday has been debunked by even other business groups. They had even ludicrously claimed that 300,000 businesses will go bankrupt if Malaysia introduces minimum wage,” said MTUC Sarawak Division secretary Andrew Lo in a media statement here on Monday (Feb 7).
Lo also referred to a news article: https://www.malaymail.com/news/malaysia/2016/05/06/citing-failed-prophecy-smes-reject-mefs-latest-claim-of-wage-floor-cal/1113961
Similarly, Lo said the Sarawak Housing and Real Estate Developers’ Association (SHEDA) “continue to ignore empirical evidence that justifiable minimum wage increase does not lead to unemployment.”
“Such recognition is by no other than the 2021 Nobel Prize in economics award for a study that proved that raising minimum wages does not lead to increased unemployment.
“With this most prestigious of global recognition, employers should no longer argue that increase in minimum wage would lead to job losses. It is embarrassing that some business leaders still claim that minimum wage leads to unemployment,” he said.
Lo said SHEDA claims that some employers are forced to pay more in wages and consequently, they would end up hiring fewer workers, which would eventually lead to higher unemployment rate.
“This is wonderful because the construction sector employs mostly foreign workers. SHEDA confirms that minimum wage increase should lead to a reduction of foreign workers. Reducing foreign workers is actually one of the objectives of minimum wage,” he said.
“SHEDA claims that based on past experiences, raising the minimum wage had proven to cause prices of goods to spike.
“The minimum wage was not increased since 2020, but prices have increased in the meantime, despite the pandemic. It is therefore a fallacy to claim that price increase is due to minimum wage,” he said.
Going further back, Lo said minimum wage was only introduced in Malaysia in 2010, yet prior to its introduction the people experienced price increase and inflation at a higher level than after minimum wage was introduced.
“Prices of houses have increase by so much faster than wage increases until the average Sarawakian can no longer afford to buy houses or even apartments.
“By continue to resist wage increase, SHEDA is cutting it nose to spite its face; eventually no one, except the superrich and business owners will be able to buy houses or apartments. Developers may have to close shop then,” he said.
Lo said the lower income group actually spent almost all of their income on consumer goods.
“By resisting wage increase, SHEDA is reducing spending on consumable goods, therefore reducing business, especially SME businesses.
“SHEDA also claims that the workers who are willing to work for lower wages could be denied job opportunities as a result of the government-mandated minimum wage policy. This is indeed illuminating of its ultimate intention to reduce wages.
“Perhaps workers work for free so magically we will have zero unemployment. Perhaps workers should reduce their wages so business owners and SHEDA will graciously reduce the cost of houses,” he said.
Lo said a benefit to the country is that higher wages will lead to higher purchasing power which in turn will lead to increased domestic demand and reduce reliance on exports which are at the mercy of other countries’ economic performance.
“It will also spur productivity growth as employers have to invest in more efficient production methods instead of relying on millions of low paid, mostly foreign workers.
“Malaysia has fallen behind Singapore, Hong Kong, Taiwan and South Korea due mainly to antiquated views of some businesses. Soon we will fall behind Vietnam, Indonesia and Philippines.
“Already Indonesian workers are not coming in as huge numbers and we have to resort to Bangladeshis,” Lo said.
