Marketing

International Journal of Academic Research in Economics and Management Sciences September 2012, Vol. 1, No. 5 ISSN: 2226-3624

Minimum Wage Laws in Malaysia: An Answer to the Increasing Rate of Unemployment

Kaviyarasu Elangkovan

Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia Abstract This study aims to study the perspective of the minimum wage laws gazette by the government of Malaysia besides explaining their underlying incentive structure. Workers in Malaysia celebrate Labour Day knowing the minimum wage that will be paid to workers in the private sector, which will be RM900 per month for employees in the Peninsula and RM800 for those in Sabah, Sarawak and the Federal Territory of Labuan. Prime Minister Datuk Seri Najib Tun Abdul Razak when revealing details of the minimum wage on 30 April 2012, said it complements the National Transformation Policy that is meant to drive Malaysia towards becoming a high-income nation. With some exceptions, this will be implemented in six months after the Minimum Wages Order is gazetted. Finally, Malaysia will have a minimum wage policy in place. However, the minimum wage policy is not a guarantee of better things to come. It has to be matched with hard work, innovation and vigilance. Labour productivity has to improve consistently across the board. Employers had, naturally, been lukewarm about Malaysia having a minimum wage policy. But the sooner the employers understand the overall benefits of minimum wages, the better. Malaysia cannot be a develop nation if a significant portion of its workers have salaries that keep their household income below the poverty line. A high-income economy does not rely on low-cost labour to speed up progress. Instead, it is prompted by ideas and value enhancement. This research was done to explore how the government started of the minimum wage law policy and how the market conditions favor these policies. Several data were obtained from the Ministry Of...