Wither minimum wage bill?
Writer: Lee Hwok Aun
Published: Fri, 13 May 2011
In my last column I wrote about our rush to meet grandiose targets and end up with partial or delusional solutions. Right on cue, Datuk Seri Idris Jala disclosed on April 26 that Pemandu is expecting do deliver a modus operandi and quantum of minimum wage by the end of this year.
Nothing was reported about how the wage floor would be deliberated now and reviewed in years to come, and how the compliance will be monitored and enforced. But a deliverable outcome in the form of a minimum wage rate will be rendered in a few months.
In my February article, in anticipation of the government’s then commitment to deliver a minimum wage bill in Parliament in March, I noted this is a vital national objective that demands robust parliamentary debate.
I should be more specific, especially since that bill has still not arrived: we need a comprehensive new law that establishes minimum wage determination, monitoring and enforcement mechanisms.
A few days before Pemandu publicised its foray into minimum wage, the Malaysian Employers Federation (MEF) issued a press release calling for a national wage council to be set up quickly, without passing a new law.
These statements by the MEF and Pemandu undermine the establishment of a minimum wage system consistent with and worthy of Malaysia’s aspirations to be a high-income and developed nation.
The existing law – the Wages Councils Act (WCA) of 1947 – is grossly inadequate for a full, effective and sustained implementation of minimum wage. The scope of the WCA is too limited for the requirements of a national minimum wage system. The plural form in its title makes clear that the Act sets out the terms for various councils overseeing designated areas, sectors or industries, not a single national wage council which is a far larger and more complex programme of action.
The WCA also severely lacks elements crucial for the effective monitoring and enforcement of minimum wage. Its lack of clear procedures for monitoring compliance, designation of authority and functions to government agencies, and protection for whistleblowers underscores the need for it to be replaced, not amended.
Overall, the WCA is oriented towards specific and impermanent mechanisms, whereas we need a comprehensive and permanent new system.
Instead of ad hoc commissions of enquiry to study the prospects for sectoral wage floors, which the WCA provides for, our national minimum wage legislation must establish mechanisms for continuous and rigorous analysis of labour market and wage data, review of minimum wage levels, and other relevant information.
Aside from Pemandu’s murky jurisdiction over setting minimum wage, we should also be concerned that deliberations in the labs that serve as its source of authority have not benefited from the rigorous labour market analysis and formal tripartite representation that would transpire from new laws and a new national wage council and ancillary agencies.
Moreover, the Ministry of Human Resources also conducted a minimum wage lab in Putrajaya in February 2011, where international consultants presented empirical findings and facilitated discussion across the range of stakeholders.
Does Pemandu’s lab override the Ministry of Human Resource’s lab?
The best way to clear the air is to table comprehensive new minimum wage legislation as the government has promised for this June. Parliament owes workers a vigorous debate over this bill, so that the wage council to be established is safeguarded sufficient autonomy, authority and resources to determine and implement minimum wage.
And amid this debate, let’s not be distracted by a propagated but basically irrelevant objection: that we should leave minimum wage to be determined by “productivity”.
This argument boils down to faulting low wage earners for being less productive, and is often advanced by the MEF. But it hardly applies to wages at the bottom end.
First, in many cases of low-paid workers, the amount of work is assigned by bosses. Think about this. You tell a person they will be paid according to how much they work, then you tell them how much they get to work. Who is responsible if they earn low wages?
Second, it is difficult to precisely determine one worker’s contribution in a production line. This problem applies to productivity-linked wages at all levels, but is more severe for the lowest-earning workers, who are more likely to be one of many performing the same repetitive, elementary tasks.
Third, in some sectors, technically possible measures of productivity make for redundant or meaningless requirements if we are to truly abide to a productivity-linked system.
Take a person who cleans toilets. According to this argument, he or she is paid poorly because of low productivity – he or she cleans the toilet only twice a day.
It follows that this person will receive higher wages if he or she cleans the toilet three times per day, four times per day.
Very soon, though, it becomes pointless (once every hour?). Which is why janitors are not paid according to productivity; they are paid as low as possible because the system allows it.
It’s also because our culture generally demeans such labour, which reinforces the case for minimum wage – it lends dignity to lowly work.