1. The workers of Malaysia must be happy over the RM900 per month minimum pay. It will give them a higher standard of living.
2. But the minimum wage would I think, cause a domino effect. Those now receiving RM900 per month would not be happy with the idea of their juniors getting the same wages as themselves. To preserve the salary structure their wages must be raised also. And of course if their wages go up those above them would also demand an increase so that their seniority would be properly compensated.

3. So the increase in minimum wage would result in increases in the wages of all categories of workers and employees. Costs of everything must certainly go up.

4. So will the overtime pay. It would be double of the RM 900 per month base salary and quadruple for work after the usual working hours. Considering the number of weekends and holidays in Malaysia, the salary bill would be substantially increased.
5. This increase should not worry the Government. But it should worry the private sector. Already Malaysia’s wages and salaries are higher than all the Asean countries excepting Singapore. It is certainly higher than China. This might deter both domestic and foreign investors.

6. If investments do not come in, the number of new jobs created would be diminished. This might increase unemployment.

7. Unless Government revenue increase substantially the increased salary bill would have to be met by reducing development budget. This will have other unwelcome side effects.

8. I am sure the Government financial experts have already taken into consideration all these things when they advised the Cabinet. It is just that I worry. Some rating agencies have been talking about down-grading this country. I hope they are not serious. Malaysia has always managed its finances well. I am sure that productivity would increase to compensate for the higher wages and overall costs.

(The views expressed here are those of the author/contributor and do not necessarily represent the views of TTKM. This article was first published in Tun’s blog in 2012. Read what he said yesterday :


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