Asia-Pacific, Civil Society, Development & Aid, Economy & Trade, Food and Agriculture, Global Governance, Globalisation, Headlines, Human Rights, Labour

LABOUR-MALAYSIA: Forget Investors, Fix Minimum Wages – Unions

Anil Netto

PENANG , Jul 16 2007 (IPS) - Malaysia&#39s umbrella trade union body is pressing ahead with its campaign for a minimum wage despite the government&#39s stand that such a benchmark would put off foreign investors seeking a low-cost environment.

The Malaysian Trades Union Congress (MTUC) has stepped up its eight-year-long campaign, which would mainly benefit private sector workers, after the government awarded hefty pay rises to civil servants in May that lifted junior-ranking staff above the official poverty line.

The general council of the MTUC, a federation of unions representing all major industries and sectors with a total of about 500,000 members, is due to meet on July 19 to discuss its next move.

&#39&#39I don&#39t want to pre-empt my colleagues on the council, but I would say sentiment is brewing,&#39&#39 Abdul Razak Abdul Hamid, the MTUC&#39s Penang division chairman, told IPS. &#39&#39The grass-roots feel that something should be done by the government.&#39&#39

On Jun. 25, in a rare show of strength, the MTUC staged a nationwide picket as hundreds of workers gathered at more than a dozen locations across the country. On mainland Penang, the turnout exceeded organisers&#39 expectations as some 1,000 vociferous workers gathered along a busy thoroughfare near the Prai Industrial Estate.

Workers waved placards that read &#39&#39Don&#39t marginalise workers&#39&#39, &#39&#39Toll up, sugar up, Astro (pay TV) up, wages not up&#39&#39 and "Thailand, Indonesia has minimum wage – Malaysia has none&#39&#39.

&#39&#39Workers are suffering from price increases,&#39&#39 Gopal, an electrical workers&#39 union representative at the demonstration, told IPS. &#39&#39Most factories in this area are paying a basic salary of as low as 350 ringgit (101 US dollars). &#39&#39

Unionists have pointed out that employers are taking advantage of the absence of a minimum wage to suppress wages and exploit workers. They note that tens of thousands of lowly paid private sector workers earn monthly wages ranging from 300-450 ringgit (90-130 dollars).

&#39&#39Even five-star hotels in Kuala Lumpur pay a basic wage of 290 ringgit (84 dollars) per month to cleaners and waiters,&#39&#39 noted the MTUC in a memorandum urging Prime Minister Abdullah Badawi to introduce a minimum wage.

Such paltry wages fall well below the official poverty line (monthly) income of 691 ringgit (200 dollars) in peninsular Malaysia, 765 ringgit (221 dollars) in Sarawak state and 888 (257 dollars) ringgit in Sabah.

The MTUC is asking the government to introduce a minimum monthly wage of 900 ringgit (261 dollars) and a cost of living allowance of 300 ringgit (87 dollars). It points out that the minimum wage they are asking is less than the total monthly income earned by the lowest ranking civil servants, which is now above 1,000 (290 dollars) ringgit.

The MTUC&#39s demands may have some justification. Analysts have pointed out that an individual would have to earn at least 1,200-1,500 ringgit (348 – 435 dollars) to live in dignity in urban areas such as Kuala Lumpur, where rentals, food prices and transport costs have soared in recent times.

A decent minimum wage, the MTUC says, would attract more Malaysian workers and reduce the dependence on foreign labour.

Not so, counters Human Resources Minister Fong Chan Onn. He said that a 900-ringgit (261 dollars) minimum wage would lead to a surge in migrant workers from neighbouring countries as wages here would rise well above the average wage in those countries. He pointed out that a minimum wage meant paying the same amount to the 1.5 million legal foreign workers already here.

&#39&#39The minister has inadvertently let the cat out of the bag,&#39&#39 an academic closely following the issue, told IPS. &#39&#39The government has always claimed that foreign workers are only employed here on the same conditions as local workers, that foreign workers are not being used to keep the wage rate down. Now, he objects to a minimum wage rate as it would mean that foreign workers would have to be paid the same as locals.&#39&#39

This, concluded the academic, meant that the labour market in this country has been &#39&#39distorted by the import of foreign workers to deliberately keep down the wage rate&#39&#39.

Government officials have also expressed concern that a minimum wage would push up operating costs here and drive foreign investors away to Indochina, China and India. &#39&#39We are as concerned about workers’ wages but we must ensure we remain competitive in the global context as well,&#39&#39 said Fong.

As an alternative to a minimum wage, he said that a survey involving more than half a million employees was now being carried out to identify the lowest paying jobs in the country. The Human Resources Ministry would then establish special wage councils to regulate wages in the lowest-paying sectors.

The MTUC stepped up its campaign after Badawi announced a hefty pay rise for 1.2 million civil servants, ranging from 7.5 percent to 42 percent, which took effect on July 1. He also announced a 100 percent increase in the cost-of-living allowances. Those in the lower ranks received the largest hikes in percentage terms, lifting the monthly income of the lowest paid civil servants to above 1,000 ringgit (290 dollars).

In justifying the wage hikes, Badawi said the government &#39&#39acknowledges the higher cost of living and is always sensitive to the impact of rising prices, especially on the lower income groups&#39&#39. Cynics, however, pointed out that the government could go to the polls soon – though its term does not expire until 2009.

Whatever the motive, unionists point out that low-income private sector workers have suffered because there have been no major corresponding adjustments in their wages to reflect the higher cost of living.

Union leaders argue that the government must have carried out an in-depth study of the cost of living and its impact on wage earners before raising civil servants&#39 wages and allowances. &#39&#39So there is no reason why the wages of 8 million workers in the private sector should be suppressed,&#39&#39 said Abdul Razak.

The academic mentioned earlier said that a minimum wage would be a far more effective tool in redistributing income in favour of the poor. Many of these poor are economically disadvantaged ethnic Malays, the main beneficiaries of government affirmative action policies aimed at reducing inter-ethnic disparities.

A controversial focus of such policies has been ensuring that 30 percent ethnic ownership in companies falls in the hands of the Malay and other indigenous groups – an approach that has concentrated wealth in the hands of a small group, thus contributing to widening intra-ethnic inequalities.

He pointed out that about a third of ethnic Malays employed fall at the bottom of the occupational hierarchy. At the Jun. 25 demonstration in Penang, for instance, most of the protesters were ethnic Malays workers, with a sprinkling of Indians and Chinese.

&#39&#39If the government is really serious about closing the inter-ethnic income gap, an effective way to do so would be to see that those at the bottom get a better income (through a minimum wage) – not screaming and shouting about shares in companies and ownership of commercial buildings, both of which are out of reach of the vast majority of the people,&#39&#39 he said.