KUCHING: There are positive and negative implications when it comes to minimum wage increase.
In stating this, Malaysian Future Institute Fellow Datuk Dr Madeline Berma said the increase in minimum wage will raise the income level for low salary workers.
“By raising the minimum salary, it will help in reducing hardcore poverty, increase productivity, economic growth, and increase workers’ standards of living and welfare.
“Besides that, it also increases food security especially in low-income households and closes the gap between the lowest and highest-paid workers,” she told New Sarawak Tribune.
She was asked to comment on the recent United Nations Children’s Fund’s (Unicef) proposal to the government to increase the minimum wage rate in Malaysia to RM2,102 from the current RM1,500, considering key factors such as the cost of living, poverty line income and productivity.
Dr Madeline further explained on the negative side, the minimum wage recommended by Unicef would lead to cost-push inflation due to increase in labor cost.
“This will lead to an increase in the prices of products and services. In addition, small firms may go out of business,” she said.
She added that the minimum wage must be calculated by taking into account cost of living based on location such as states as well as in urban and rural areas.
