Productivity myth: Where we are barking up the wrong tree — Callistus Antony D’Angelus
MAY 8 — A minimum wage has been announced, and it is left to be seen as to how it will finally be implemented. We will have to prepare ourselves for many twists and turns along the way and there is the possibility that it will not even be implemented. It will take political will to stay the course, especially with selfish interests at play and not everyone looking at the better interest of the common Malaysian people.
There are fervent opponents to the concept of the minimum wage, among them the longest-serving prime minister in Malaysia’s history. The Malaysian Employers’ Federation (MEF) is also firmly in tow, arguing that market forces should determine the wage levels and that increased productivity should be the focus.
In the case of productivity, it is mainly within the realm of employers to determine productivity levels and the competitiveness of their firms. Nothing prevents an employer from raising productivity via the various means available to them, such as the injection of capital, increased automation and mechanisation, as well as in training employees to be more productive. It is the failing of employers in the main where productivity levels in any country lag behind. Employers have to look themselves in the mirror before passing the burden of productivity on to employees.
The government and its policies are also an important precondition in the determination of productivity levels. Here, the government has for too long promoted a system where the need for subsidies and political patronage supersedes the desire for economic competitiveness. The low-cost mentality of our economy, and the middle-income trap which the country is currently caught in, can largely be attributed to the poor economic policies which are in place.
Where market forces are concerned, we need only to examine whether the market is really free. With the bailouts as a result of the global financial crisis, there can be no grounds for any party to claim that markets operate freely. Malaysian corporations have been beneficiaries of bailouts as well. We cannot have a system where a free market operates for the poor and a social welfare system for businesses — in particular large businesses.
The minimum wage should serve as an impetus to drive productivity growth, and to enhance the nation’s competitiveness. There will be exits and new entrants into the economy, and this is necessary for any economic progress. The minimum wage level should also be examined in terms of its sufficiency, where there seems to be no good reason for the people in Sabah and Sarawak to be left behind.
The minimum wage is a right, and is by no means a gift. Any thoughts or proclamations that it is a gift to the people are at best naïve, at worst mischievous, and it should be corrected. There is still a long way to go ensure that the living standards of the working poor are elevated to decent standards.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.