By Chiong Yoke Kong

KUALA LUMPUR, Malaysia--Prime Minister Ismail Sabri Yaakob announced last Saturday that a new minimum wage policy will come into effect on 1 May, whereby the minimum wage will be increased to RM1,500. 

However, many businessmen and free-market proponents raised their objections against the policy change.

The opponents of the policy asserted that while raising the minimum wage, the government is overlooking the reality of the market. Despite its good intention, such a policy change would backfire and cannot guarantee the rights of the low-wage workers.

Regardless of being left or right-leaning, governments around the world do not oppose raising minimum wages but only differ in terms of the extent of the policy changes.

Nonetheless, when Malaysians discussed minimum wage, we often narrowed down our narrative to issues such as “should the minimum wage be increased?” and “will the small and medium-sized enterprises (SMEs) be affected?”.

It is as if the government should not implement any policy change as long as it might potentially bring about negative impacts.

Progressive policies should complement progressive institutions in order to maximize positive results. As elected representatives, we should consider and explore how a progressive policy, such as raising the minimum wage, should be implemented to bring about maximum benefits to the people and the country. 
Progressive policies should not be swept under the carpet merely because there are potential negative impacts.

Concerning raising the minimum wage, we should brainstorm ways to improve our tax system, fiscal policies, and economic environment to ensure that minimum wages can provide a decent living environment to the low-wage workers.

At the same time, the improvements should reduce the negative impacts brought about to the SMEs while strengthening Malaysia’s business environment and the competitiveness of our labour market.  

In recent years, even some right-leaning international organizations that fervently champion the free market, such as the International Monetary Fund (IMF), World Bank, and G20, have revised their negative attitude toward raising the minimum wage.

In 2012, the above-mentioned organisations held a summit and published a joint report, stating that raising minimum wages at an appropriate level can reduce the market exploitation of labour and create a net positive impact on the labour market. )

From a different perspective, given the uncertainties in the international landscape, many SMEs in Malaysia are under pressure due to various skyrocketing costs, such as raw materials, energy, and logistics. Hence, it is foreseeable that the low-wage workers at the least-paid end of the labour market are even more vulnerable.

As such, the government should consider the appropriate ways to intervene in the market to stabilize the costs of business and ensure that SMEs can survive in the face of the ever-increasing costs.

Given that low-wage workers are part of the employees of the enterprises, businesses and our economy as a whole will face a lose-lose situation if the workers are unable to shoulder their financial burden.

Hence, the main question that we should explore now is: After raising the minimum wage, how can we reduce the impacts against the SMEs, elevate the competitiveness of our businesses, and assist the vulnerable workers with receiving decent pay to live an honourable life?