MINIMUM WAGE “Case Study in Malaysia”

MINIMUM WAGE

“Case Study in Malaysia”

1.0                     Definition;

Minimum wage is the fix amount of salary and it is usually announced by the government because of the demand from the society.

          Fact;

Many economists said that minimum wage will result a bad economic result in that country. How far is it?

2.0   Let’s discuss.

The Malaysian governments announce the minimum wage for private sector workers, RM 900 for peninsular and RM 800 for Sabah and Sarawak. For the big company they have six month to prepare and for the small company they have given 12 month to prepare. When this minimum wage implemented, many company try to reduce the amount of workers. So, the unemployment will increase. But, it is not much unemployment because the minimum wage is not too high.

Even the minimum wage increases the unemployment rate but, in the same time the purchasing power among the Malaysian will be increase. Where, the people can buy many things that they want. This is because they have enough money.

When the purchasing power increase the demand for goods and services will increase. So, when the demands increase the firms try to increase their production. To increase the production, this required workers as a factor of production. Means that the firms need to hire more workers. When more workers needed, it will reduce the unemployment rate.

As a conclusion, the minimum wage is better for our economics. Even the MTUC (Malaysian Trade Union Congress) also said that, this is a good start for Malaysian economics. Minimum wage is encouraging a big problem. The problem is only unemployment rate will increase but this is in short-term problem. How about in the future or in long-term? This will give a lot of benefit for our economics. The most important to implement this minimum wage is it should be done by R&D.