FACULTY OF BUSINESS AND ACCOUNTANCY
CSGB6101 Human Capital Management
In the late 2010, the issue of a minimum wage policy has been debated in Malaysia after nationwide picketing organized by the Malaysian Trade Union Congress (MTUC). Prime Minister Datuk Seri Najib asked businesses to embrace “fair and equitable” wage as part of strategy to make Malaysia a high income nation. In this study, it is debated on why a minimum wage policy should not be implemented, and implications of its enactment.| Minimum Wage: Moving Malaysia BackwardsGroup: Chua Siang Cher, Lance CGA090035Gan Chai Yee, Amelia CGA090033Chen Khong Ling CGA110039Abbas (Arad) Toushkan CGA100085| Semester 1, 2011/12| Lecturer: Assoc. Prof. Dr. Angeline Tay|
Purpose of this document:
* This document provides an outline of the wage context in Malaysia, and opines a market forces policy.
Sections of the DocumentPage
* Executive summary 3
* Overview of minimum wage of minimum wage in Malaysia5 * Literature review
Definition and objectives of minimum wage6
Empirical evidence on minimum wage7
Weaknesses of minimum wage8
* Discussion 13
* Conclusion 14
Recent headlines like Occupy Wall Street which protest against the 1% elite of the world monopolizing the world economy and setting the business rules has got the world’s attention on income inequality. The minimum wage policy is always keenly debated as a tool to address the income inequalities in the labor market between the low and high-income groups. The debate of minimum wage in Malaysia heated up recently, with both labor interest group and employer interest group lobbying the government on behalf of their own agenda.
Objectives of the minimum wage include giving the unskilled a fair wage and a chance to live a dignified life. It also reduces the opportunities for abuse and exploitation. Various studies were conducted on the policy of minimum wages. It is found that a minimum has many negative effects on the economy. It stunts academic development, increase unemployment, reduce competitiveness and reduce the quality of life through inflation. A lot of the time, minimum wage policy just fails to achieve what it is set up for.
The developing status of Malaysia makes it tricky to decide for or against a policy of minimum wage. In view of its huge illegal immigration problems and its quest for a high income nation, it is opined that wage regulation should take a back seat for now in favor of alternative measures of boosting its citizen’s quality of life.
The current economic crisis and impending doom of the European Union has got the world focus on the functionality of money markets and its regulations. It is unfortunately that this focus does not address fundamental issues of economic growth. Recent headlines like Occupy Wall Street which protest against the 1% elite of the world monopolizing the world economy and setting the business rules has got the world’s attention on income inequality. Recent research also suggested this income inequality leads to enduring deficiency of consumer demand and impair economic development (Fitoussi & Saraceno, 2010, Onaran, Ö. 2009, Horn et al., 2009).
Wages policy is a hot debate worldwide now due to the limelight received from Occupy Wall Street movement. The massive protest has also inspired 1,500 countries globally to fight income inequality. It is a huge global problem, caused by the difference between two models of economic growth. Firstly the credit-based model, where economic growth is stimulated by consumer demand likes the United States which is a high income country with a stable dollar. The second model is the...
...adopt a statutory minimumwage has been the subject of debate in Malaysia for a number of years. Part of the motivation behind this debate has been the slow growth of wages relative to labor productivity. There are issues by implementing wage policy in Malaysia which I explored by doing this assignment. In 2002, the government is decided to implement a minimumwage policy where they set RM800 in West Malaysia and RM900 per month in East Malaysia as a minimumwage that employer should pay to their workers. This report is aimed to make an analysis on whether it is a wise decision to implement minimumwage policy.
However, there are advantages as well as disadvantages along with the cause and effect scenario that arises from implementing the minimumwage policy.
The analysis part in this assignment is critical to whether the government should implement minimumwage policy in Malaysia. It is truth that the economy of Malaysia is being harm and going downwards due to the implementation of this policy. Although the aim for Malaysia by implementing minimumwage policy is to eradicate poverty and develop this country, Malaysia into a high income...
One might ask, what is minimumwage? Minimumwage is the lowest hourly amount an employer can pay an employee. There may be some exceptions based on the type of worker. There are two kinds of minimumwage rates, state and federal. Right now, the current minimumwage is $7.25 per hour. In some states, minimumwages are higher than the federal rate. Workers are paid the higher amount in those locations.
Minimumwage has been a hot subject among the policy makers and economists.
It has also been a hard and tight issue for the economists. This goes back as far as the 1938 Fair Labor Standards Act. Minimumwage was a politically debatable issue. In 1933, President Franklin Roosevelt attempted to legislate a federal minimumwage, but it was taken down. Eventually, President Roosevelt won and Congress passed the FLSA. At that time minimumwage was set at 25 cents per hour. Since the passing of the Fair Labor Standards Act, the United States has required that all firms that do at least $500,000 worth of business per year pay their co-workers a minimumwage. Minimumwage plays a big part in the cost of labor and hGet Access to...
Should We Raise the MinimumWage to the Average Pay Rate?
University of Phoenix
September 30, 2013
“Should We Raise MinimumWage to the Federal Average Pay Rate?”
On the United States Department of Labor website it states that in 1938 it was decided that a federal minimumwage should be set. When it was set, it was set for the amount of $0.25 an hour. Now as of 2013 it is $7.25 an hour. (Grossman 1978. Washington’s minimumwage is the highest at $9.19 an hour, it joins its 18 other states with a higher wage. Almost half the states agree with the minimumwage; five have wage lower and another five do not even have a minimumwage. There is clearly a divide on the thoughts of raising minimumwage to make things more even. What our group wants to question here today is the raise of minimumwage to the federal average pay rate. In the United States after researching 426,448,460 people in more than a thousand occupations the average pay rate would be $20.60. (United States Department of Labor 2013) Thomas Sowell says it best,
`“Unfortunately, the real minimumwage is...
...The minimumwage is the lowest rate at which a worker can be played. There she minimumwage laws pegged to hourly, daily and even monthly rates, although U.S. law is pegged to an hourly wage. Also, a minimumwage law usually makes it illegal for a person to sell his labor for less than the minimumwage rate
The general purpose of the minimumwage is to guarantee a living wage to all workers who work a standard period of time, whatever that might be. In theory, any labor who works 40 houses a week on minimumwage should be at or above the poverty level line. However, the minimumwage has not kept up pace with the inflation in the United States and the cost of living increases more than the wage increases that are given and that way behind the standards
Minimumwage laws were first started in Australia and New Zealand in the 1890s.The first minimumwage to be law was in Massachusetts in the 1912 but it only applied to children and women. The federal minimumwage was established in 1938 by the Fair Labor Standards Act. Initially set at 25 cents an hour, the wage has been raised periodically to reflect changes in inflation and productivity....
...Minimumwage in Malaysia: need for it and its’ possible effectiveness
There has been growing debates concerning the minimumwage in Malaysia, with strong opinions from both sides of the arguments. In 1979 edition of their introductory textbook, William B. Aumol and Alan Blinder explained, “The primary consequence of the minimumwage law is not an increase in the incomes of the least skilled workers but a restriction of their employment opportunities” (p.47). On the other side of the debate, social activists, policymakers and other non-economists often argue for an increase in the minimumwage. Advocates of the minimumwage have included Franklin D. Roosevelt, Martin Luther King, A. Philip Randolph, Walter R. Reuther, Edward Filene, Beatrice and Sydney Webb.
Finally, Malaysia took its stance and made its first legislative attempt at putting in place a national minimumwage on twenty first June 2011 .Introduced by Human Resources Deputy Minister, Maznah Mazlan in Parliament, the National Wages Consultative Council (NWCC) bill was tabled for its first reading.
Most significantly, the general public does not widely share the negative opinion of the minimumwage, according to surveys....
A STUDY ON MINIMUMWAGE IN MALAYSIA: NEED FOR THE POLICY AND ITS CONSEQUENCES
MELODY OF SEA
INTERNATIONAL ISLAMIC UNIVERSITY OF MALAYSIA
16TH OF DECEMBER
The salary that is earned by the citizens represents the social well being of the nation.As for year 2011 thirty percent of Malaysia’s population earn below RM700 while the poverty line income is set at RM720. The absence of theminimumwage policy results in drastic exploitation of citizens of Malaysia and the immigrants. This research paper is targeted to understand whether Malaysia needs an implementation of minimumwage policy by making a survey and comparison analysis through different articles.And most importantly the consequences of the policy . The research indicated that janitors and guards do not have enough salary to cover their day to day expenses. This paper recommends that the Malaysian government should implement a national minimumwage to reduce the problem of poverty and exploitation of low-skilled workers. It is hoped that this paper will initiate future research peraining to this field, considering other low-skilled workers and not just janitors and guards.
TABLE OF CONTENTS
Literature Review 7
...History of the MinimumWage
· 1938 -- The minimumwage was first enacted into law as part of the Fair Labor Standards Act (FLSA) of 1938. The original minimumwage applied to workers engaged in interstate commerce and the production of goods for interstate commerce. In 1938, this applied to roughly 11.0 million workers out of a total of 54.9 million workers. The minimumwage was set at $0.25 per hour.
· 1961 -- Amendments to the minimumwage law extend coverage primarily to employees in large retail and service trades as well as local transit, construction, and gasoline service station employees.
· 1966 -- Amendments to the minimumwage law extend coverage to state and local government employees of hospitals, nursing homes, and schools and to employees of laundries, dry cleaners, large hotels and motels, restaurants, and farms. Subsequent amendments extended coverage to the remaining federal, state and local government employee not protected in 1966, to certain workers in retail and service trades previously exempted, and to certain domestic workers in private household employment.
The 20-percent increase in the federal minimumwage scheduled to occur over the next year may not be the best way to boost the incomes of low-skilled workers and their families. This article...
...The Minimum-Wage Controversy
The minimumwage sets a minimum on what employers are allowed to pay workers. In the United States, the federal minimumwage began in 1938 when the government required that covered workers in covered industries be paid at least 25 cents an hour. At that time, the minimumwage was about 40 percent of the average manufacturingwage. The minimumwage was raised occasionally, and by 1996 it had reached $4.25 per hour, which was only 33 percent of the average manufacturing wage rate. Because the minimumwage had declined relative to average earnings, President Clinton proposed and Congress passed a minimum-wage increase to $5.15 per hour in 1997.
This is an issue that divides even the most eminent economists. For example, Nobel laureate Gary Becker stated flatly, “Hike the minimumwage, and you put people out of work.” Another group of Nobel Prize winners countered, “We believe that the federal minimumwage can be increased by a moderate amount without significantly jeopardizing employment opportunities.” Yet another leading economist, Alan Blinder of Princeton and former economic adviser to President Clinton, wrote as follows:
“The folks who earn the...