The proposed increment of the minimum wage to RM1,500 per month would have two opposing effects, said economic analyst Dr Madeline Berma.

She regarded the suggested revision, which could be implemented by the year-end, as ‘a good move by the federal government, as a higher minimum wage level could reduce poverty’.

“Wage increase will fit the low-income groups out of poverty.

“Putting more money into the pockets of low-income workers will allow them to purchase more of the basic goods and services needed to survive,” she told The Borneo Post when contacted.

However, the Academy of Science Malaysia fellow also pointed out that an increase in the minimum wage ‘would not affect all workers or affect them equally’.

“Minimum wage raises the income of some workers, but it may not raise the income of poor households.

“It does not affect workers in the informal sector where workers are not effectively covered by the minimum wage legislation.

“Even in the formal sector, minimum wage laws are often poorly enforced,” she pointed out, noting that there were also employment effects to consider.

“An increase in the minimum wage may cause some employers to lay off workers. If these workers lived in low-income households, poverty might increase – at least in the short term.”

Madeline also said layoffs in the formal sector could put downward pressure on wages in the informal sector by increasing competition for informal jobs.

Human Resources Minister Datuk Seri M Saravanan was recently reported as saying that a minimum wage of about RM1,500 per month could be implemented before the year-end.

He said the new rate had yet to be finalised as the ministry was awaiting Cabinet approval.

He also highlighted the need to resolve the new minimum wage as soon as possible and once approved, the figure would be announced by the Cabinet.

The country’s minimum wage was increased in February 2020 to the current RM1,200 per month, from the previous RM1,100.

Source:
courtesy of THE BORNEO POST

by MARILYN TEN

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