Analysis: Malaysian Workers Need More Clout To Demand Better Pay, Conditions

Malaysia has already been having issues with stagnant wages before the pandemic but the rising inflation without any significant increase in wages means the people’s earnings have lost their spending power. Inflation is currently at 3.4 percent. 

Although Malaysia increased the minimum wage from RM1,200 to RM1,500 a month beginning May 1, 2022, its implementation has been slow going. Prime Minister Datuk Seri Anwar Ibrahim announced on Monday that the Cabinet will soon discuss how to settle the issue once and for all.

On top of that, RM1,500 is not enough to live on. Ask anyone in the Klang Valley and they will tell you the sum barely covers rent, food or other necessities for a single person, let alone a family. Bank Negara Malaysia was previously reported as saying that the living wage for a couple with two children in Kuala Lumpur was RM6,500 a month currently and RM2,700 in 2016.

“Our living costs are really high. For someone who is getting the minimum wage of RM1,500 and they have five kids, that money is not enough to buy food for the children who are schoolgoing children. So the family needs a decent wage to live on,” said E. Parameiswary, a member of Parti Socialis Malaysia and coordinator for Media Programme, 2023 May Day Task Force.

She added that although Malaysians were earning less in the past, living costs were low then and many necessities were affordable.

Many have argued the recent hike in the minimum pay to RM1,500 is still not enough for people to make ends meet, calling for reasonable living wages. The World Bank and the Department of Statistics Malaysia pegged the poverty line at RM2,208 for a four-member household. 

But knowing this, the chances that workers can get higher pay and better conditions to meet the rising cost of living are slim, say experts, because Malaysian workers are losing their voice.

 

Minimum wages in Malaysia are relatively new, introduced in 2012 and implemented the following year. The original sums were not much: RM900 in Peninsular Malaysia and RM800 in Sabah and Sarawak.

One of the popular arguments against increasing the minimum wage is it would incur additional costs for businesses and cause job losses, especially among small companies. In Malaysia, the implementation of the RM1,500 minimum wage for employers with fewer than five workers has been pushed to July 1 this year. Another argument is that increasing the wage floor for everyone may be too much for low-wage areas and could result in job losses and lower profits. 

“It’s difficult for the government to suddenly decide that ‘Ok everyone, living wage, certain level’. If you do that, then it will affect the business,” said Mohd Afzanizam Abdul Rashid, chief economist and social finance at Bank Muamalat Malaysia.

However, there is a middle ground for hiking the minimum wage. Studies have shown, and economists have said, the increase has to be done within a range in order to hit a sweet spot that will not cripple low-wage and low-cost areas but will be enough for high-cost areas. 

If the amount of increase is not too much for the area, higher wages will actually help businesses. A 2023 University of California Berkeley study found that these businesses could pass the cost to customers without much negative impact. 

Its co-author Michael Reich, who is also the chair of UC Berkeley Centre of Wage and Employment Dynamics, was quoted as saying the study also found that higher wages make it easier to recruit workers and retain them and to reduce turnover rates. Other research shows that those workers are likely to be a little more productive as well.

Mohd Afzanizam said there needs to be a benchmark to decide on the amount of wages needed to live within a certain area.

“To set a wage level, it has to be a reflection of the geographical aspect of it, I mean urban and rural,” he said.

Many workers’ rights activists think the minimum wage is still too low, no matter where it is implemented. But any change or increase to the minimum wage, which the activists believe is warranted, is unlikely to happen. 

“It should not be (referred to as) minimum wage. You say minimum, everyone will follow minimum,” said former assistant secretary (education) at Malaysian Trades Union Congress (MTUC) K. Somasundram.

He added the difficulty in negotiating for better pay and conditions was due to the depowering of unions.

 

The state of unions in Malaysia is not very strong despite laws allowing unionisation. One issue is the dilution of power.

Somasundram told Bernama at the last count, there were 770 trade unions in Malaysia with 993,000 members, adding that membership was declining. On Monday, MTUC secretary-general Kamarul Baharin Mansor told Bernama the number of members now stood at between 500,000 and 800,000, out of the 15 million workers nationwide.

With so many unions and a relatively small number of members, the collective voice to bargain and negotiate for better pay and working conditions has mostly been neutered.

“Most of the unions have less than 500 members, which is not good. If you want your voice to be heard, you must have fewer unions with bigger memberships. Only then can you build your voice,” he said.

Experts told Bernama laws regarding trade unions in Malaysia also need to be updated in order to close the loopholes and strengthen the unions. One of the reasons for this is to reflect changes in the economy such as the emergence of the gig economy. E-hailing drivers and food delivery riders cannot unionise and ask for better conditions because they are not considered employees.

Selangor Employees Empowerment Institute chairman Syed Syahir Syed Mohamud told Bernama that drivers and riders with Grab and FoodPanda, for example, are unable to unionise and negotiate for better pay and working conditions as well as better protection.

He said gig workers are considered contractors because they are providing a service using materials from others and are not employees of the platforms concerned.

“Under the law in this country in order for you to form a union, you have to be recognised by the employer – that is the basic thing for a trade union. So who is the employer? Who is going to recognise you? Who do you want to bargain with? They say, ‘No no you are the contractor. Nobody wants to negotiate with you. You have to negotiate with yourself’,” he said.

”That’s ridiculous,” he added.

There are other loopholes that employers use to circumvent unions. Although laws do not allow any employer to prohibit or punish employees – including foreign workers – from joining a union, there are ways to do so.

Michael Cheah, who has practised labour law for the past five years, said some employers get around union demands by promoting employees so they will lose eligibility to belong to the union. 

“Employers try to do it in a subtle way. Sometimes they do union-busting and all that. One example is changing the grade or status of the workers to a more senior manager position so they remove them from the scope of those who are entitled to join unions. They so-called promote them but they still have the same job functions,” he said.

In other words, the employees can no longer be in the union because they are now part of the management. 

He added unions should reach out and recruit as many workers as possible. He also said workers should be aware of their rights and take action accordingly. 

Other updates include allowing better protection under the Social Security Organisation or Socso, Malaysia’s social security programme that provides funds and benefits to workers in case of injuries sustained at the workplace, emergencies, occupational illness and death.

The experts acknowledge that the process to update the relevant laws is likely long, although they hope it can be expedited. 

In the meantime, Parameiswary said nothing is stopping employers from being proactive and providing for their workers’ well-being, adding it is in their interest to do so.

“Without workers, they don’t make money. It’s important. They depend on workers too to make a profit and, hence, have their responsibilities,” she said.

 

-- BERNAMA