The media everywhere has been highlighting the issue about minimum wage and how implementing it can make a difference to a society. What exactly is minimum wage? Minimum wage refers the lowest wage that an employer is allowed to pay; determined by contract or by law (Wordnetweb, 2011). It is not implemented here in our home country, Malaysia yet but it has been a constant topic of discussion on whether it should be practiced. There are many pros and cons, good and bad, benefits and drawbacks on minimum wage. Thus, there are many different opinions regarding whether it is necessary for a government to implement this remuneration or not. Some may say that it is not a wise to implement minimum wage as it will increase unemployment. This is because, many unskilled workers may have difficulties in finding a job as they do not have the skill and knowledge required in certain fields of work. On the other hand, some may also argue that it will increase the living standards and economic growth of the country, as everyone would have a greater buying power and hence it should be implemented in the country's wages system. Minimum wage can be enforced by the government through imposing a minimum wage law where all firms and companies are required to pay a certain wage line to their employees. However, some of economist agreed that minimum wages does not bring much changes because "people tend to forget that the money to cover the increased wages must come from somewhere; it does not just magically appear from nothing" (Tyler Williamson, 2010). Higher wages would lead to higher cost of production and eventually higher expenses. Another group of economist would argue that minimum wages is a way of redistribution of income to the lower income group and it would lead them out of that group bracket and hence increase the level of income of the country and boost economic growth. Human being humans have want and need. However, money plays a big role in determining whether one can obtain what a worker wants or needs. The minimum wage should be implemented such a way that it is able to satisfy the basic needs of a worker such as food, shelter and transportation. So, should minimal wage be implemented in Malaysia? Well, the needs of a mankind for basic subsistence would be the top priority in any decision making.
2.0 Body of Report
2.1 Small Responsibility of Firm and Enterprise.
Enterprise or firms are large companies that decide that amount of wages given to each worker assuming that government intervention does not exist. It is under enterprise and firm power to determine the minimum wages each worker get based on their position and the skills they have. Enterprise and firms would classify workers with a hierarchy structured organization and hence classify them into low income earner, middle-class income earner and high class income earners.
Minimum wages is a must to enable workers to cover their daily basic needs. This is mainly focus on the lower income group as they are considered living a sub-standard living. When an economy is in a boom or in a recession, this lower income group must be in best interest of a firm as they depend on their monthly wages as their savings would not be much compared to higher income group. The objective here is to bring up the lower income earner to a middle-class income earner. "When every Malaysian worker is embraced as a member of the middle class and part of the Middle Malaysia, there will be no poor Malay, Chinese or Indian worker. We will become a high income economy in which everyone will have a greater stake to preserve and enhance our social harmony". (Tan Sri Dr Fong Chan Onn, 2010). It could be also said that the worker's welfare is part of the firm responsibility too.
2.2 All for profit towards firms.
Firms argue that minimum wages is not affordable as it increase cost of production and thus decreasing the level of profit of a firm. Firms also say that it is not possible to maintain a minimum wage during a global economic crisis or even during a recession. Firms state that their main priority is to be profitable for they own gain and not a social welfare company. Often, top ranking officials in a company would work on business principle which is to maximize monetary gain and not based on social welfare. On the other hand, firms would also use minimum wages as an excuse and chance to cut a worker's wages which is higher to the minimum level of wages. This would increase the revenue of a firm or enterprise by a great margin value. A greater minimum wage would increase the cost of production of a firm which will ultimately lead to a rise in price of goods and services and this will indirectly lead to a fall in demand making the firm less profitable.
2.3 Basic Subsistence above everything.
Firms that are not being able to provide or afford basic subsistence should not be in the market and hence should not received support from any party including the government. "Those enterprises which exist based on low wage that is under the subsistence level of workers should not have the right to operate business." (President Franklin Roosevelt, 1993). To meet all the needs of a worker seems impossible and not practical but it is important that firms do as much as they are able to cater for the basic needs of a worker. Furthermore, a survey has been done by Cambodia Institute of Development Study (CIDS) shows that in order for workers to finance their basic subsistence, they would have to work overtime. Workers would not be able to cover their cost of living without the extra income from overtime. (Kang, R. & Liv, D., 2009). Firms should priorities their workers for their basic subsistence before increasing their profit. Cost of production could also be decrease in other means such as cost-cutting measures that involves working with the government for lower taxes and getting cheaper raw materials.
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Kang, R. & Liv, D. (2009). Living Wage Survey for Cambodia's Garment Industry. Phnom Penh, Cambodia: Friedrich
Ebert Stiftung and Cambodia Institute of Development Study
