Tuesday, May 01, 2012

Volume 4 Issue 16: Intelligent Investing

Common Sense - Minimum Wage Edition

Not even sure if this is just a coincidence, but on the Monday after Bersih 3.0, the Najib administration quickly announced the minimum wage at RM900 (for West Malaysia) and RM800 for Sabah and Sarawak. For some, the announcement of a minimum wage is long overdue, while others, claim that it will destroy their businesses.

I think that all of the above issues totally miss the real point. The crux of the problems in Malaysia's labour force was correctly highlighted by Lim Guan Eng's response to Najib's announcement:
The DAP warned today that the government's minimum wage policy announced last night will not result in better quality of life without being more competitive, creating high productivity jobs and bringing women into the workforce.
I don't know the kind of advisers that Najib surrounds himself with, but based on the evidence provided in the same article above, it is no surprise that after a disastrous Bersih 3.0 outing, Najib's hand was forced to move:

Datuk Seri Najib Razak's announcement last night follows the increase of minimum wage by around 40 per cent in Thailand last month, part of Yingluck Shinawatra's campaign pledge that helped propel her to win Thai elections last July. 
Taiwan’s move to increase minimum pay by 5 per cent last year also helped President Ma Ying-jeou win a second term in January 
Vietnam will also raise the floor wage for the public sector by 27 per cent in May after enacting a minimum wage increase of as much as 69 per cent in October for both private and state-owned enterprises. 
Thousands of workers are also expected to take to the streets in Hong Kong today, demanding Chief Executive-elect Leung Chun-ying address a widening wealth gap when he takes office in July.
As Lim Guan Eng appropriately puts it, competitiveness is the main issue here. Right up til now, Najib has focused only on the easy reforms, implementing populist measures to shore up his support.