Malaysia's umbrella trade-union body is pressing ahead with its campaign for a minimum wage despite the government's stand that such a benchmark would put off foreign investors seeking a low-cost environment.

The Malaysian Trades Union Congress (MTUC) has stepped up its eight-year-long campaign, which would mainly benefit private-sector workers, after the government awarded hefty pay raises to civil servants in May that in effect lifted junior-ranking staff above the official poverty line.

The general council of the MTUC, a federation of unions representing all major industries and sectors with a total of about 500,000 members, is due to meet on Thursday to discuss its next move.

"I don't want to pre-empt my colleagues on the council, but I would say sentiment is brewing. The grassroots feel that something should be done by the government" said Penang division chairperson Abdul Razak Abdul Hamid.

In a rare show of strength, the MTUC staged a national picket demonstration on June 25 as hundreds of workers gathered at more than a dozen locations across the country.

In mainland Penang, the turnout exceeded organiser's expectations as some 1,000 workers gathered along a busy thoroughfare near the Prai Industrial Estate.
Workers waved placards that read 'Don't marginalise workers', 'Toll up, sugar up, Astro (pay TV) up, wages not up', 'Thailand, Indonesia (have) minimum wage - Malaysia has none' and 'Workers are suffering from price increases'.

An electrical workers' union representative at the demonstration, who only wanted to be known as Gopal, said, "Most factories in this area are paying a basic (monthly) salary that is as low as RM350."

Unionists have maintained that employers are taking advantage of the absence of a minimum wage to suppress wages and exploit workers. They note that tens of thousands of lowly paid private sector workers earn monthly wages ranging from RM300-450.

Such paltry wages fall well below the official poverty line monthly income of RM691 in Peninsular Malaysia, RM765 in Sarawak and RM888 in Sabah.

"Even five-star hotels in Kuala Lumpur pay a basic wage of RM290 per month to cleaners and waiters," noted the MTUC in a memorandum urging Prime Minister Abdullah Ahmad Badawi to introduce a minimum wage.

Migrants in the middle

The MTUC is asking the government to introduce a minimum monthly wage of RM900 and a cost-of-living allowance of RM300. It points out that the minimum wage requested is less than the total monthly income earned by the lowest-ranking civil servants, which is now above RM1,000.

The demands may have some justification. Analysts have pointed out that an individual would have to earn at least RM1,200-1,500 to live in dignity in urban areas such as Kuala Lumpur, where rentals, food prices and transport costs have soared in recent times.

A decent minimum wage, the MTUC says, would attract more Malaysian workers and reduce the growing national dependence on foreign labor.

Not so, countered Human Resources Minister Fong Chan Onn. He said a RM900 minimum wage would lead to a surge in migrant workers from neighbouring countries, as Malaysian wages would rise well above the average pay in those places. He pointed out that a minimum wage would mean paying the same amount to the 1.5 million legal foreign workers already here.

"The minister has inadvertently let the cat out of the bag," said an academic closely following the issue, but who declined to be named..

"The government has always claimed that foreign workers are only employed here on the same conditions as local workers, that foreign workers are not being used to keep the wage rate down. Now, (the minister) objects to a minimum wage rate as it would mean that foreign workers would have to be paid the same as locals."

This, he concluded, means that the Malaysian labour market has been "distorted by the import of foreign workers to deliberately keep down the wage rate".

Government officials have also expressed concern that a minimum wage would push up operating costs and drive foreign investors to Indochina, China and India.

"We are as concerned about workers' wages, but we must ensure we remain competitive in the global context as well," Fong has said.

As an alternative to a minimum wage, a survey involving more than half a million employees is being carried out to identify the lowest-paying jobs in the country. The ministry will then establish special wage councils to regulate wages in the lowest-paying sectors, he said.

More effective tool

The MTUC stepped up its campaign after the prime minister announced a hefty pay raise for 1.2 million civil servants, ranging from 7.5-42 percent with effect from July 1. He also announced a 100 percent increase in the cost-of-living allowances. Those in the lower ranks received the largest hikes in percentage terms, lifting the monthly income of the lowest-paid civil servants above RM1,000.

In justifying the wage hikes, Abdullah said the government "acknowledges the higher cost of living and is always sensitive to the impact of rising prices, especially on the lower-income groups". Cynics, however, pointed out that the government could go to the polls soon - though its term does not expire until 2009.

Whatever the motive, unionists point out that low-income private-sector workers have suffered because there have been no major corresponding adjustments in their wages to reflect the higher cost of living.

Union leaders argue that the government must have carried out an in-depth study of the cost of living and its impact on wage earners before raising civil servants' wages and allowances.

"So there is no reason why the wages of eight million workers in the private sector should be suppressed," said the MTUC's Abdul Razak.

The academic said a minimum wage would be a far more effective tool in redistributing income in favour of the poor. Many of these poor people are economically disadvantaged Malays, the main beneficiaries of the New Economic Policy (NEP) affirmative-action policy aimed at reducing inter-ethnic disparities.

A controversial focus of such policies has been the required 30 percent corporate equity ownership by Malays and other indigenous people - an approach that over the decades has concentrated wealth in the hands of a small group, thus contributing to widening intra-ethnic inequalities.

The academic pointed out that about one-third of the Malays employed fall at the bottom of the occupational hierarchy. At the June 25 demonstration in Penang, for instance, most of the protesters were Malay workers, with a sprinkling of Indians and Chinese Malaysians.

"If the government is really serious about closing the inter-ethnic income gap, an effective way to do so would be to see that those at the bottom get a better income - not scream and shout about shares in companies and ownership of commercial buildings, both of which are out of reach of the vast majority of the people," he added. - IPS