Living on RM33.30 a day?

The minimum wage will be raised to RM33.30 a day for Peninsular Malaysia next year, as announced by Datuk Seri Najib Razak in his budget speech. That is roughly RM4.20 an hour for an eight-hour day of work.

For those potheads, stop snickering. For many readers, this may not seem a lot.

Implementing a national minimum wage in Malaysia also raises another issue, which is the disparities in salaries by geographical location.

It is no surprise that states such as Kelantan and even Sabah and Sarawak pay much less compared to Selangor and even Pulau Pinang.

The reasoning behind this? Development.

The more developed a state is, the more they have to pay their employees and the higher the cost of living. In fact, some would argue that living below RM50 a day in the Klang Valley would be ludicrous.

Even more ludicrous are the grand expectations some Malaysians have over earning a minimum wage.

How do you reduce living costs to RM33.30 when you calculate paying the monthly instalment for a car, or the mortgage on a house, or pay for that Rose Gold Apple iPhone 6S enjoy a “lepak” session at a local mamak stall?

My answer to that would be we are talking about basic living, not the Malaysian hipster scene.

We must note the issue of how much a minimum wage should be is a global issue. In America, the movement is now upping the ante to US$15 (RM64) an hour. In the United Kingdom, it is being slashed to £25 (RM163.50) a week.

The main difference between these two developed nations and ours is that we have yet to calculate what is the most basic cost of living for a day, a week or even a month.

In the UK this figure is determined by the Joseph Rowntree Foundation and is called the “Minimum Income Standard” (MIS).

In their findings for 2015, the Foundation actually details out the MIS for households with children, a lone parent with one child and individuals. You can view the whole report here.

Needless to say, Malaysian policies on minimum wage is basically taking a stab in the dark compared to what the US and UK do. And one of the major excuses given is that companies will fail if they have to cater to a high minimum wage.

This has been proven wrong in so many instances, the latest one being that of Empire Payments. You may know him as the CEO that suddenly raised his lowest employee’s salary to US$70,000 a year.

Guess what? Despite naysayers all around, his company is thriving.

Another false reason given is that Malaysians are not productive enough to be worthy of a high wage. This is, yet again, another fallacy.

According to the World Economic Forum (WEF)’s most recent published Global Competitiveness Report, we are at the 20th out of 144 nations, ahead of Australia, France, China, Indonesia, even Turkey.

According to the Total Economy Database and cited by the Malaysian Productivity Corp, the our country is the second best among those in Southeast Asia in terms of labour productivity.

But insofar reading the conditions in Malaysia, including the Khazanah Research Institute’s (KRIS) report on household incomes last year, one of the major reasons for low wages is also education. This is where it gets tricky.

The government – and even other governments – have an increasing amount being put into allowing Malaysians to further their studies.

For those who wish to do so locally, there is the MyBrain scheme.

For those who wish to do so in the United Kingdom, there is the annual Chevening Scholarship.

And I will admit frankly that my push for higher wages and a higher minimum wage is selfish.

Due to the repressed wages we have as a nation, less people are paying income taxes that support those with low wages by the means of subsidies, direct handouts and rebates.

We are already cutting down subsidies, but the problem now is we are cutting it too fast for wages to catch up and thus causing Malaysians to bear the brunt of the rising cost of living. Thus the rebates for the middle class in the last budget was merely a stop gap measure.

In other words, if we want to cut welfare spending by the government, we must make sure legislation exists to make sure all Malaysian wages are enough to live off comfortably. This applies to migrant labour as well, in case some are wondering. – October 28, 2015.

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