Side Views

Are foreign workers the beneficiaries of minimum wage policy? — Lim Sue Goan

JAN 31 — The implementation of the minimum wage policy has triggered a huge controversy. Is the policy benefiting foreign or local workers? Should foreign workers be included in the policy?

The Cabinet decided that foreign workers should also enjoy the policy. However, they are required to pay the RM1,250 levy. It might reduce the burden on employers, but not necessarily fully meet their demands.

Together with 57 organisations from across the country, the Malacca Chinese Chamber of Commerce and Industry held a peaceful petition campaign and submitted a memorandum in Putrajaya on Tuesday. They urged the government to shelve and review the minimum wage policy. 

Meanwhile, the MCA and other organisations think that in addition to the levy to be paid by foreign workers, transportation, meal and accommodation allowances should be included in the minimum wage.

According to an imitative financial statement calculated by the Malacca Chinese Chamber of Commerce and Industry, if a small and medium-sized enterprise (SME) has 100 local employees and 100 foreign workers, under the minimum wage policy, the company has to pay an additional RM753,130 to foreign workers and RM483,990 to local employers. In other words, a foreign worker earns RM1,853 per month, including basic salary and overtime allowances, which is higher than the RM1,515 monthly salary of local employee. In view of this, the minimum wage policy is going to benefit foreign workers instead of local employees, while increasing the expenses of employers. It seems like the policy is good for nothing.

However, the minimum wage policy is actually meant to improve the treatment received by low-income earners and help them offset their pressure while narrowing the gap between the rich and the poor and reducing social friction. Whatever the calculations and regardless of who is going to get the most benefits, the most important thing is to take care of the welfare of the working class.

Another objective of the policy is to reduce our reliance on foreign workers. If foreign workers are excluded from the policy, employers will continue hiring foreign workers instead of local employers that require them to pay higher salaries. It will then lead to the failure of achieving the targets of manufacturing and national economic transformations.

Our labour law also prohibits discrimination against foreign labour. If foreign workers are paid less compared to local workers for same tasks, it will be a violation of the law.

Therefore, if the policy is not implemented or reviewed, foreign workers should not be excluded.

From another point of view, if transportation, meal and accommodation allowances are included in the minimum wage, the difference of foreign worker’s current salaries and the salaries after the implementation of the minimum wage policy would not be much.

Currently, it is estimated that employers are bearing about RM250 of monthly accommodation, meal, water, electricity and transportation fees. If these allowances are included in the minimum wage, together with the RM1,250 levy costing foreign workers RM104 per month, the total would be RM354. After deducting RM354 from the RM900 basic salary, the actual amount earned would be RM546. In this case, it cannot help encourage employers to hire local employees.

If the salaries of foreign workers are low, local employers will find it difficult to compete with Thailand and Indonesia, which have implemented a minimum wage policy, and ultimately face the problem of manpower scarcity.

The Cabinet decided to let foreign workers bear the levy to reduce the burden on employers. Although RM104 per month is not much, it is believed to be able to assist some SME to tide over their difficulties.

Improved salaries have become the trend. Employers and employees should work together in increasing productivity to prevent bankruptcy and price rises. Only by doing so, the harm brought by the minimum wage policy can be avoided. —

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.



Please refrain from nicknames or comments of a racist, sexist, personal, vulgar or derogatory nature, or you may risk being blocked from commenting in our website. We encourage commenters to use their real names as their username. As comments are moderated, they may not appear immediately or even on the same day you posted them. We also reserve the right to delete off-topic comments