Minimum wage in malaysia


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Minimum wage in malaysia

  1. 1. Part 1: Introduction Background of Study Significance Problem of Study Statement Scope of Objectives Study of Study
  2. 2.  Minimum wage regulation had first been developed in New Zealand (1896) followed by Australia (1899) and later by Britain (1909). ˡ  Then, others countries followed suit in subsequent years; France (1915), Norway (1918), Austria (1918), Czechoslovakia (1919), Germany (1923), Spain (1923) and Belgium (1934). ˡ  The definition of minimum wages in ILO in the Article 7 of the ILO Convention No. 131 on Minimum Wage Fixing (1970) and its accompanying Recommendation No. 135. The lowest basic wage guaranteed by law as an attempt to put a floor under the wages of a particular subgroup of the working population („working poor‟). The minimum wage should not be fixed at a lower rate than one which would ensure the subsistence of the worker and his or her family. Malaysia has not ratified to this ConventionSource:(1) ILO Minimum Wage Policy- An International Review of Practices and Problems, Gerald Sterr, ILO, Geneva, pp.1-2
  3. 3. Malaysia: Section 2 of the National Wages Consultative Council Act2011 (Act 732) “minimum wages means basic wages” Under section 2 of the Employment Act 1955, the term “wages” means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include- a) the value of any house accommodation b) employer‟s contribution to any retirement scheme c) any travelling allowance or the value of any travelling concession; d) any sum payable to the employee to defray special expenses entailed on him by the nature of his employment; e) any gratuity payable on discharge or retirement; or f) any annual bonus or any part of any annual bones.
  4. 4.  The slow growth of wages relative to labour productivity (wage rate increases about 2.6% annually compared to productivity rate of 6.7%) – shows the suppression of wages, especially those of low skilled workers inefficiencies in the labour market  There were 30.6% (2010) of the total wage earners living on basic wages less than RM720 per month! below the poverty line income (PLI 2009)Source: Poverty Line Income Report (2009)
  5. 5. Unskilled worker are underpaid : – wages below poverty line < RM 720 Creates feeling of unhappiness thus affecting employees performance and productivitySource: Retrieved on 5th November, 2012
  6. 6. 1. To explore the awareness level regarding the implementation ofminimum wage policy in Malaysiaamong private sectors employees;2. To identify employees perception(whether it is positive or negative) towards the implementation of minimum wage policy; To identify factors influencing employees perceptions on theimplementation of minimum wage policy.
  7. 7.  Focus on the employees perceptions towards the implementation of minimum wage policy This survey on employees perceptions will be targeted to 30 employees working in private sectors in Shah Alam
  8. 8.  is regarded as the importance or relevance of conducting study in this particular issue of employee perception toward the implementation of minimum wage policy in Malaysia. Benefits of conducting this survey: - The government and the employers will be able to understand the employees‟ stands and views on the issue of implementing minimum wage in Malaysia - The employees will be able to express their whether it is positive or negative about the minimum wage (the survey will serves as a platform for the employees to express their opinions)
  9. 9. Part 2: Literature Review, TheoreticalFramework & Research Question Definition of minimum wage Minimum Positive and wages negative around the perceptions world Factors The implementation influencing of minimum wage in perception Malaysia Definition of perception
  10. 10. Definition of minimum wage  Minimum wage is the lowest level of remuneration permitted; the wage which in each country has the force of law and which is enforceable under threat of penal or other appropriate sanctions (International Labor Organization , 1967)  Minimum wage refers to the minimum sum payable to a worker for work performed or services rendered within a given period, whatever calculated on the basis of time or output, which is guaranteed by law and which may be fixed in such a way to cover the minimum needs of the worker and his or her family, in the light of national economic and social conditions (Thiagarajah, 2000)Sources: 1. International Labor Organization (ILO) Convention – 168th Session in Geneva Feb-Mar 1967 2. Ram Thiagarajah, A Study on Minimum Wage Fixing in Malaysia - Malaysian Trade Union Congress (2000)
  11. 11. The Provisions on Minimum Wage was promulgated by Ministry of Labour and Social Security on January 20, 2004 and enforced on March 1, 2004 There are more than one minimum wage exists in China •Different provinces/ regions have various level of minimum wages •No national minimum wage exists Up-ratings or adjustments of minimum wages are jointly decided by the government, employer and trade union representatives •By Law, minimum wages in China are updated once in two years •However, in practice the minimum wages are adjusted once a year in most placesSource: Minimum Wage Database in, retrieved on 7th November, 2012
  12. 12. Source: Minimum Wage Database in, retrieved on 7th November, 2012
  13. 13. There is a separate minimum wage legislation in India Minimum Wages Act, 1948 is an Act to provide for fixing minimum rates of wages in certain employments and it extends to the whole India More than one minimum wages exist in India Minimum wages are declared at national, regional, sector and occupational skill level Revision period of the fixed component of minimum wages can be anywhere within 5 years of its fixationSource: Minimum Wage Database in, retrieved on 7th November, 2012
  14. 14. Source: Minimum Wage Database in, retrieved on 7th November, 2012
  15. 15. Source: Minimum Wage Database in, retrieved on 7th November, 2012
  16. 16. There is more than one Minimum wage is a The wage applies to minimum wages minimum standard that those who are single and determined by law is used by employers to have a 0-1 year work (province and district pay their workers legally experience level) The fixed component gets Minimum wages are updated one in ten years calculated on monthly based on inputs received basis, and for daily from the National Wages workers can be paid on Council and is then decided daily or weekly basis by the President/ Manpower MinisterSource: Minimum Wage Database in, retrieved on 7th November, 2012
  17. 17. Source: Minimum Wage Database in, retrieved on 7th November, 2012
  18. 18. Minimum wage in Pakistan is set by the following two acts: 1. Pakistan Minimum Wages for Unskilled Workers Ordinance, 1969 and 2. The Minimum Wages Ordinance 1961 There exists a national minimum wage as announced by government for unskilled workers. However, certain province (e.g. Punjab) also fixes minimum wage rates that differ between industries and skills Up-ratings or adjustments of minimum wage is decided upon review on changes in economic conditions or cost of livingSource: Minimum Wage Database in, retrieved on 8th November, 2012
  19. 19. The minimum wage is determined by the Ministry of Employment & Labour (MOEL) based on recommendations from the Minimum Wage Council The minimum hourly wage for 2012 is 4540 won (about 4 USD) The Minimum Wage Act was implemented in 1988 and has applied to all workers since November 2000 except family businesses that hire only family members, domestic workers and seamenSource: Lee Changgeun, Challenges for Minimum Wage Campaign in South Korea (2012)
  20. 20. Mechanisms that determine the wages of workers in the private sector Wages Council Act Collective bargaining Market forces 1974 (CA) Minimum wage Wages in Malaysia are Do not provide a decent largely determined by standard of living and cover market forces only a small number of workersSource: Lee Heng Guie, Minimum Wage Policy - Curse or Cure, CIMB Economic Update (2012)
  21. 21. • Minimum wage in Malaysia has been set at RM900/month for Peninsular Malaysia and What it RM800/month for Sabah, Sarawak and Labuan entails? • It will be initially implemented on 1st January, 2013 Who will • About 3.2 million private sector workers (25.8% of total employment) will be involved benefit? in this policy Which groups or • All formal private sector employees except those who are working in domestic services sectors will sector such as domestic helper and gardener be affectedSource: Lee Heng Guie, Minimum Wage Policy - Curse or Cure, CIMB Economic Update (2012)
  22. 22. • The minimum wage will take effect six months from the date the Minimum Wage Order is When will it gazetted took effect? • SMEs are given the opportunity to apply to the wage council for an extension before the commencement date How regularly • The National Wages Consultative Council will recommend the minimum wage to the will it be government once every two years reviewed?Source: Lee Heng Guie, Minimum Wage Policy - Curse or Cure, CIMB Economic Update (2012)
  23. 23.  Perception is a process by which people select, organize, interpret, retrieve and respond to information from the world around them (Schermerhorn, Hunt & Osborn, 2010)  Perception is a process by which individuals organize and interpret their sensory perceives in order to give meaning to their environment. Perception can vary widely among individuals exposed to the same reality (Rao, 2008)Sources: Schermerhorn et al., Organizational Behavior 8th edition (2010) Sree Rama Rao, Factors Influencing Perceptions (2008)
  24. 24. PerceptionSource: Schermerhorn et al., Organizational Behavior 8th edition (2010)
  25. 25. Positive (+ve)Negative Perceptions (- ve) Employers Employees Government Interested parties
  26. 26. Possible positive perceptions and its factors Factors PerceptionsThe perceiver (+) The implementation of minimum wage- Interests (ensure satisfaction policy in Malaysia is good because: of their needs)- Experience (current salary - Minimum wage will provide them level) necessary social protection to enable- Expectation (to have decent and them overcome poverty (Lee, 2012; fair wage) Thiagarajah, 2000)The situation - Minimum wage will increase their- Increase in cost of living purchasing power (Thiagarajah, 2000)The target - Minimum wage will increase pay rates- Characteristics of minimum of low-paid employees (Verner, 2009; wage (minimum wage serves as Nolan, O‟Neill & Williams,2001) a standard for wage - Minimum wage will increase morale determination, mandated and governed by law) and productivity (Nolan, O‟Neill & Williams,2001)
  27. 27. Possible negative perceptions and its factors Factors PerceptionsThe perceiver (-) The implementation of minimum- Interests (ensure satisfaction wage policy in Malaysia is bad because: of their needs)- Experience (current salary - Minimum wage will force employers to level) cut certain fringe benefits to reduce- Expectation (to have decent costs (Wilson, 2012; Falk, Fehr & and fair wage) Zehnder, 2006)The situation - Minimum wage will increase- Increase in cost of living inflationary pressure (Wilson, 2012)The target - Minimum wage will lead to- Characteristics of minimum unemployment (Carpio, Nguyen & wage (minimum wage serves Laing, 2012; Ni, Wang & Yao, 2011; as a standard for wage Wang & Gunderson, 2011) determination, mandated and governed by law)
  28. 28. Independent VariablesFactors influencing Dependent Variable perception Employees• Needs satisfaction perception towards• Salary level minimum wage• Future expectation • Positive on fair wage • Negative• High cost of living• Characteristics of minimum wage
  29. 29.  Is employee aware on the minimum wage policy gazetted in Malaysia? – to achieve objective 1 Does employee think that the implementation of minimum wage policy is good (positive) or bad (negative)? –to achieve objective 2 What are the factors that lead to the positive or negative perceptions? – to achieve objective 3
  30. 30. Research Design & Methodology Research design The population The data and sample analysis size Data collection Sampling method and technique sources of data
  31. 31.  The research design that will be use in this research is exploratory study This is because a study on employees perceptions towards the implementation of minimum wage is very limited and not much is known on the perceived situation This type of research design is to explore the employees perceptions towards implementation of minimum wage in Malaysia
  32. 32.  The unit of analysis for this study is individual (the individual here is referring to the employee working in private sector) Time horizon for this study will be a cross-sectional study whereby the data will be collected at one point in time.
  33. 33.  The population of this study is the employees who are working in private sector in Shah Alam The sample size of this study is 30 employees from the total population Refer to Roscoe (1975) sample sizes larger than 30 and less than 500 are appropriate for most research
  34. 34.  Non-probability sampling will be used in this study Convenience sampling technique will be used which the respondents are selected because they happen to be in the right place at the right time.
  35. 35.  The data will be collected by conducting a structured interviews with the respondents A list of predetermined questions will be prepared before the interview is conducted All the answers given by the respondents will be taken down or recorded for the purpose of analysis The same questions will be used throughout the interview sessions with all the respondents and will be asked in the same manner.
  36. 36.  Primary data - Data will be collected through structured interview Secondary data - Data will be collected from the journal articles, reports, periodicals and web documents
  37. 37. The primary data collected from the interviewsession with the respondents will be analyzeby using content analysis methodContent analysis is a research tool ortechnique for the objective, systematic andquantitative description of manifest content ofcommunications (Berelson, 1952)It is used to determine the presence of certainwords, concepts, themes, phrases or sentenceswithin texts or sets of texts and to quantify thispresence in an objective manner