Left on its own, the labour market could correct itself, provided that there are no outside forces interfering in the supply and demand mechanism. But in our Malaysian case, the government has this rule that undermines the labour marketâ€™s bargaining power in that â€˜employees can only join in-house trade unions; large nationwide umbrella trade unions are not allowedâ€™. As such, workers have no negotiating power for the wages they get.
The government further undermines the labour market by doing almost nothing about rampant illegal worker immigration from neighbouring countries. There were cases in the past in Sabah whereby illegal immigrants were given citizenship, hence enlarging the pool of cheap labour.
Introducing minimum wage legislation would bring a lot of benefit to the country. Letâ€™s say that we set minimum wage at RM5 per hour this year. Inefficient companies who cannot afford to pay this minimum wage will have to close shop, freeing labour resources to be employed elsewhere…
Would a minimum wage law would reduce our competitiveness? Would FDI flow to other countries? That is shallow argument hiding the fact that competitiveness is equal efficiency in every aspect of our activity. Who is more efficient, a street sweeper using a truck or a few street sweepers using brooms and baskets?