•  kuala lumpur
• Tuesday, March 27, 2012
• Inter Press Service

Malaysia plans to introduce a national minimum wage for its workers against stiff opposition from employers and manufacturers who warn that such a policy would shut down nearly 200,000 small and medium enterprise (SME) units.

Human resources minister Subramaniam Sinnapan has dismissed the manufacturers’ claims as 'false and alarmist,' but Prime Minister Najib Razak appears rattled and has delayed an announcement until May 1.

'I will study the matter in-depth and make an appropriate announcement on Labour Day,' he was reported as saying by the ‘The Star’ daily on Mar. 20. The government is caught between having to shore up votes in an election year and meeting the demands of manufacturers.

Najib cannot ignore warnings by Malaysia's Employers Federation that the closure of 200,000 SME units would mean the loss of four million jobs in a population of over 28 million people. Adding to the pressure, the opposition-ruled state of Selangor declared a Malaysian ringitt 1,500 (487 dollars) minimum wage for its employees, starting Jan.1.

But, Selangor has had to set aside 97.5 million dollars to assist state-owned companies that are unable to pay the new wages. 'Four million of them earn less than 162.5 dollars a month,' said Arulchelvam Sinnaiyan, secretary-general of the Parti Sosialis Malaysia, a small but vocal party that has two lawmakers in parliament.

According to a UNDP country report, Malaysia is one country in Asia that has a wide income gap, with the top 20 percent people enjoying 70 percent of the wages and the bottom 60 percent earning 20 percent. A middle class of 20 percent struggles to pay off loans on houses, cars and credit cards.

In the 2008 general elections, the bottom 60 percent of voters, many of them SME workers, rebelled, choosing the opposition Pakatan Rakyat over the ruling National Front (NF) in the biggest upset since independence from Britain in 1957.

The ruling NF government wants to fix minimum monthly wages at 292. 60 dollars for SME workers, but manufacturers say they are already struggling to stay afloat on a profit margin of three to six percent and will lose out to competitors in Asia, especially China and India.

The country is trapped in a low-cost economy and has to move out to higher skills and higher cost manufacturing as neighbouring Singapore did in the past two decades. But the biggest hurdle is the upcoming general election whose outcome can go either way. While Najib is popular, he has a lot of baggage carrying the NF, especially corruption issues.

In the latest of a series of scams, a minister was forced to resign after her family diverted funds meant to make the country self-sufficient in beef production into buying plush condominiums and expensive cars.

Najib sees the four million SME workers as potential voters, many of whom are struggling on wages that are way below the official poverty line of 247 dollars a month.

© Inter Press Service (2012) — All Rights Reserved. Original source: Inter Press Service

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