What is the minimum that workers should be paid?

The official minimum wage: RM1,200/ month Employers should not pay their workers less than the minimum wage. But it happens, especially for unskilled work, eg certain restaurant staff and cleaners. And not a few of these workers do not have retirement savings (EPF) or accident insurance cover (Socso).

Sep 13, 2020

By Anil Netto
Saraswathy, a cleaner in her fifties, looked despondent. “I don’t know what to do now.”

She had just been informed that she had lost her job, as the place where she worked had changed cleaning contractors.

On the wrong side of 50, she will find it even more difficult to find another job.

With hardly any retirement savings to fall back on, she will lose a source of income that covered a good part of her household’s income.

Workers like her are among our urban poor who are often hidden from society.

In any discussion of poverty in Malaysia, there are three key figures we should think of.

The official minimum wage: RM1,200/ month
Employers should not pay their workers less than the minimum wage. But it happens, especially for unskilled work, eg certain restaurant staff and cleaners. And not a few of these workers do not have retirement savings (EPF) or accident insurance cover (Socso).

This also happens when workers are employed by third-party contractors who invariably allow the real employers to escape from statutory labour obligations.

For a long time, the minimum wage was above the poverty line income. That changed only recently. 

Revised poverty line income threshold: RM2,208/month
For ages, this figure had remained at RM980, which produced an artificially low poverty rate for the nation of just 0.4 per cent in 2016.

With the revised threshold of RM2,208, the official poverty rate rose correspondingly to 5.6 per cent.

So we now have a situation where the poverty line income is higher than the minimum wage. What this means is that the minimum wage that employers have to pay workers is well below the poverty line income. Many workers are effectively receiving ‘poverty wages’.

Living wage in KL: RM2,700 – RM6,500
In a 2018 study, the central bank, Bank Negara, said the living wage in Kuala Lumpur for a single person ought to be RM2,700.

For a childless couple and a couple with two children, the wages should be RM4,500 and RM6,500 respectively.

So we now have a situation where the mini mum wage is RM1,200, there is a huge gap between that figure and the living wage.

Imagine if both parents in a household with two children are on minimum wage, that household would earn RM2,400 when the living wage needed would be RM6,500.

It thus did not come as a surprise when the then-UN special rapporteur on extreme poverty and human rights pointed out that 27 per cent of KL households earned less than the Bank Negara estimated figures for a living wage.

Other independent groups estimated the real poverty figure for Malaysia at 16 to 22 per cent, well above the 5.6 per cent official figure.

Tacitly recognising this, the government provides some small yearly Bantuan Sara Hidup assistance to many low and middle-income households, but this is still far short of what is needed for a liveable income.

With the country now strapped for cash and employers hit by the economic slowdown, one way out is for the government to boost its social spending. It should further subsidise public ed ucation, public healthcare and public transport.

The money could be made available by scrapping unnecessary mega-projects which are not a priority now. A wealth tax could be imposed on the top one per cent — surely a small price to pay to strengthen national solidarity.

To reduce household debt levels, home prices should be fixed within reach of the people. What this means is that the prices of homes for the bottom 40 per cent of households should not be more than three times the average annual income of these households.

To keep the prices of food in check, the government should protect farmlands (from commercial development) and fishing grounds (from sand mining and land reclamation). It should support local farmers and smallholders to boost domestic food security so that we do not have to rely so much on food imports.

Now why is all this important for Christians? Catholic Social Teaching stresses the preferential option for the poor. So we cannot go about our lives without a care while our neighbours are struggling, often in situations that are hidden from our view – in urban slums or remote areas.

Instead, we are called to “make your views heard... defend the cause of the poor and the wretched” (Proverbs 31:9).

Let’s start by defending the cause of the poor, where we are.

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