34% of Malaysian Workers (not migrant workers) earning below poverty line

Under the UMNO-led BN government in Malaysia, cheap labour was used as a pull factor to lure in foreign investors and companies to set up factories, etc in Malaysia. To be successful in keeping local labour 'cheap', the government did keep the cost of living low with cheap water, electricity, telecommunication, postal rates, TV/Radio, free roads, food, cooking oil, cooking gas, petrol/diesel, etc... so much so that workers earning low wages could still manage to have a decent life... (Oops yes, beside cheap labour ...the other assurance was a docile workforce - and that is why there are not only laws against protests, public assemblies - but also a n active resistance against the formation of workers union. In some sectors and areas, unionization of workers was also banned.)

Possibly to improve the domestic market for Malaysian, there was a lack of effort in building up a cheap efficient public transport system - so much so, people who had to go to work and elsewhere were forced to buy cars, etc - and private transport became a necessity in Malaysia. This, together with increasing cost of living, coming also in the form of new expenditures like tolled-roads and high parking rates in the major towns, made sole-bread winner families an impossibility. Now both spouses had to work. Sometimes, the salary of one spouse just goes to the monthly payment of their Malaysian car. This reality, suddenly created a demand for domestic workers - and suddenly, when there was no such need before became one. 

One can say there was an unwritten 'social contract' between the government and the people, i.e. you continue to receive low wages, and I (the government) will make sure that the cost of living stays low so that you can still have a decent living. But, the UMNO-led BN government broke this social contract, and prices of everything shot up....but then employers, who had become too used to paying low wages, continued doing so - and when more and more locals 'protested' by not wanting to work for such low wages, the government once again betrayed Malaysian workers and allowed employers to employ migrant workers at the same low rate (or at even lower wages)..in even more oppressive conditions. The government even gave employers permission to deduct these workers wages to recover the levy that employers had to pay the government when they chose to employ migrant workers, and not local workers - resulting in many migrant workers working literally for 'free' for 6 months to a year. Migrant worker work passes also allowed the migrant worker to work for only one specific employer, and this means that the worker, who is oppressed and sometimes even cheated of wages, overtimes, etc have no choice but to work for that particular oppressive employer. A complaint to the Labour Department about a deprivation of certain legal worker rights also would result in sudden termination and deportation. Hence, employers were rewarded by the UMNO-led BN government with a new pool of lowly paid, docile and oppressed workers.

Now, with low wages also means lower pensions and/or lower EPF contributions, and this means that even the solution of increasing wages for current workers would not solve the problem for all the elderly ex-workers, and with the cost of living going up there is a real concern about the elderly - the former workers. There is also now a realization that the EPF scheme is a failure, for the lump sums taken out at the point of retirement is hardly sufficient for 3-5 years, and with an average lifespan being above 75 years, it is a major problem. Pension scheme, on the other hand continues to give the ex-worker a certain payments every month until the ex-worker dies, and thereafter a smaller monthly payment to their spouses until death. Now, the UMNO-led BN government is trying to encourage pension schemes - but maybe, it is just too late and may not happen as 'job security' is no more a right that workers, especially in the private sector enjoy anymore. Now, with 'short-term fixed contracts, labour supply companies, outsourcing practices, etc - there really is no more 'job security' for workers - one cannot really hope to be able to work until retirement age anymore when one gets a job. The UMNO-led BN government, by policy and law, can change this trend but alas this government is now pro-business pro-employers rather than pro-worker pro-people. Calls for a minimum wage law has fallen on deaf years...and so, Malaysia unlike Indonesia, Thailand, Philippines, India, US, Britain, Canada, New Zealand and Hong Kong, to nama a few, still do not have a minimum wage law. India, for example, has had the Minimum Wage Act since 1948 and it is the States that fix the minimum wage, and in 1996, the Indian Federal Government also set National Floor Level Minimum Wage as the lowest minimum wage.

The minimum wage law is really not a big deal, it only sets the 'minimum wage' - not the actual wage that workers receive. What it will do is to ensure that workers are not paid less than the Minimum Wage, which should be the wage that will enable a family of 5 have a minimum decent life.

It is interesting to note that a recent study by the government, i.e. the Ministry of Human Resources involving 1.3 million Malaysian workers shows that 34% are earning even below the poverty line. Note, that this study did not involve migrant workers - if it did, most migrants would also be seen to be earning below the poverty line - remember also that migrants have more expenditure in the form of agency fees, etc...

The poverty line is RM720-00 per month, and how much are we paying domestic workers and other migrant workers now?

We need a Minimum Wage law now - as employers in Malaysia have just gotten too used to paying workers low wages, and reaping higher profits and without being compelled by law, the wage structure will be extremely slow to change...

The Human Resources Ministry's study of 1.3 million Malaysian workers has found that a shocking 34 percent earn below the poverty line of RM720 monthly.

In a statement today its minister Dr S Subramaniam said that the National Employment Returns Study in 2009 showed that there was a case for wages to be increased.

He adds that it was difficult for Malaysia to rely on market forces alone to determine wages because of the several factors, such as the influx of unskilled foreign labour.

“Skilled jobs are synonymous with higher wages. However, in many instances, employers do not pay for skills but instead rely on unskilled foreign workers. This has also largely dampened wage growth,” he said.

He also cited the World Bank study which found that the wage trend in Malaysia had recorded only an annual 2.6 percent growth during the past 10 years, as compared to the increasing cost of living during the same period.

Minimum wage policy in the offing

Subramaniam said that a proposal on a national minimum wage policy would be tabled to the cabinet by the end of October.

Should the policy be adopted, new laws would have to be formulated and a national council to implement the policy would have to be established.

Subramaniam (right) added that at this point, the ministry has not decided whether it was in favour of a national, regional or sectoral form of minimum wage policy.

“It is up to the cabinet to give us the direction,” he said.

Malaysia is in a race against time to achieve Vision 2020, the goals of which include turning the country into a developed country.

Prime Minister Najib Abdul Razak's New Economic Model has also outlined the need to turn Malaysia into a high-income economy in order to break free from the middle-income trap. - Malaysiakini, 5/8/2010, Study: 34% of workers earning below poverty line