Awkward U-turn on minimum wage
Posted on 6 February 2013 - 08:30pm
ON JAN 22, Human Resource Minister Datuk Seri Dr S. Subramaniam, in responding to calls by certain quarters for the government to introduce separate wage systems for locals and foreign workers, pointed out that Malaysia's labour laws must adhere to international labour standards.
These would mean that our policies do not allow for discrimination of workers based on race, religion and citizenship. A two-tier wage system – with different schemes for locals and foreigners – would be counter-productive as it would induce employers to evade hiring Malaysians for cheaper foreign workers.
However, just days after Subramaniam made the assertion, MCA president Datuk Seri Dr Chua Soi Lek issued an ultimatum that jolted the picture. In effect, Chua expressed support for employers wanting foreign workers and locals to be differentiated. Specifically, they were planning to protest against the ministry for requiring them to pay for the foreign workers' levy.
Claiming that MCA had received many complaints from employers, Chua warned: "If there is no decision after Chinese New Year, we (MCA) can no longer hold them back ... We will tell them, do what needs to be done."
The statement ignited a backlash from groups that have stood up for the rights of migrant workers. Malaysian Trades Union Congress (MTUC) secretary-general Abdul Halim Mansor described MCA as acting as a "spokesman" for the wealthy and advocating the demands of industry bosses.
"Understandably Chua does not care for the needs of workers who slog daily for wages as low as RM500 a month," he said.
The policy and quantum for a minimum wage had been debated for over three years before a decision was made in March last year, and gazetted in July, Abdul Halim said. "Chua has just woken up from a long slumber to issue an ultimatum that the government U-turn on the minimum wage policy," he said.
Under the policy, the minimum wage is set at RM900 in the peninsula and RM800 in Sabah and Sarawak.
As events unfolded, on Jan 29, about 200 traders and small business owners claiming to represent 57 business associations, marched to the Prime Minister's Office in Putrajaya to submit a memorandum calling for foreign workers to be excluded from the minimum wage policy. They insisted that the policy was a "slap and a burden" to business owners.
The cabinet the very next day decided that foreign workers will have to bear the cost of their levy payment. It was, in effect, a U-turn.
Finance Minister II Datuk Seri Ahmad Husni Hanadzlah reasoned that the move was reverting to a 1992 policy, and argued that it would not be a burden to foreign workers as they would only need to pay between RM34.16 and RM154.16 a month, while enjoying a salary increase of between 30% and 50% to RM 900 a month, from the previous average of between RM600 and RM700.
But there is indignation and ire over this sudden about-turn that will not likely subside. The MTUC is submitting an official complaint to the International Labour Organisation (ILO), calling the reversal in policy "a great injustice" against migrant workers.
Some 67 trade unions and civil society groups in Asia have called on the government to rescind the decision, demanding that all discrimination against workers, based on their nationality, gender and duration of employment contract, be immediately stopped.
Irene Fernandez, executive director of migrant rights group Tenaganita, said the move effectively catapulted migrant workers as the highest taxpayers in terms of income and levy, despite them being allegedly deprived of "benefits" from the taxes.
"Assuming all migrants will earn the minimum wage of RM900, the levy deductions will range between 5% and 17% a month. On the other hand a Malaysian needs to pay taxes only when they earn more than RM3,000 per month," she said.
Tenaganita has pointed out that migrant workers have to pay exorbitant medical bills, their children cannot go to school; and they are also excluded from safety nets such as the Employees Provident Fund and the social security scheme.
All things considered, it is the question of how the government ended up making such a U-turn that will linger, helped in no small measure by Chua's ultimatum to the ministry – and the minister's own assurance that the country must abide by "international labour standards".
Himanshu is theSun's news editor. Comments: email@example.com - The SunDaily, 6/2/2013, Awkward U-turn on minimum wage
It was 67 - now 75