Would a RM3,100 minimum wage ease workers’ burden?

Would a RM3,100 minimum wage genuinely reduce workers’ cost-of-living burden? An opinion article responding to the Malaysian Trades Union Congress proposal says the answer may not be straightforward.

The writer acknowledges that MTUC wants to protect workers from rising living costs, but argues that higher minimum wages can also push up the prices of goods and services. Because businesses depend on labor, the article says, higher wages can increase production, sales and service costs. Those costs may then be passed on to consumers, sometimes by more than the wage increase itself.

The proposed increase would affect more than general workers. Office staff, managers and company directors could also seek higher pay, while owners, shareholders and investors would continue to seek returns. Building maintenance and other related expenses could rise as well.

The writer argues that wage growth should match productivity. If a worker producing 1,000 units a month at a RM1,700 minimum wage must produce 1,824 units after the wage rises to RM3,100, the wage cost per unit would remain about RM0.59. The article also calls for firm government controls on prices.

Cleaning contractors, it says, would be especially exposed because many operate under contracts signed before any wage increase. A current contract price is estimated at RM2,700 per worker, while basic pay of RM1,700 rises to about RM2,000 after contributions and annual leave costs. A RM3,100 minimum wage could therefore create a RM400 loss per worker. For a contractor employing 50 workers, that would mean a RM20,000 loss unless contract prices were adjusted.