Neither the Human Resource Ministry nor its minister Dr S Subramaniam are involved in the final decision on the minimum wage policy.
INTERVIEW
PETALING JAYA: Malaysia’s minimum wage policy, which is scheduled for announcement before Dec 31, will most likely see starting salaries fixed at between RM740 and RM1,200.
Human Resources Minister Dr S Subramaniam said that this was the range he was expecting the National Wage Advisory Council (NWAC) to come up with.
He added that the NWAC was in its final stages of deliberation.
“We have given the council till the end of the year. Definitely it will be above RM740 which is the poverty line.
“The World Bank and other studies has cautioned us that any figure above RM1,200 could have some challenging impacts on our economy.
“So the final figure could be anywhere between these two,” Subramaniam told FMT in a recent interview.
He also said that certain economic advisors had cautioned against a minimum wage set from RM1,100 and beyond that.
“They say as you move from RM1,100 and above, the risk of unemployment, the risk of being non-competitive and risk of inflation becomes higher,” he said.
Subramaniam, however stressed that the final decision on the minimum wage figure was not up to him or the ministry.
“The NWAC will decide. It is for the council to look at this figures and decide which level of risk we want to take,” he said.
‘I am not involved’
The NWAC, which has been deliberating on the minimum wage for the past couple of months, is “completely free from government interference”, said Subramaniam.
“I’m not involved, I’m not a member of the council. There is no politician, or anybody, involved.
“It is a fairly independent council consisting of workers, employers and some independent people,” he said.
While he said there are government officials within the council, their task was mainly to look at policy issues and national economic goals.
“Otherwise, to a great extent the decision is made between employers and workers, based on data given to them. It is up to them to make the most appropriate decision,” said Subramaniam.
He hoped that NWAC would come to a conclusion quickly, as the ministry has given the council up to the end of the year to come up with recommendations.
Applauding the introduction of the minimum wage, Subramaniam said it took awhile to convince those who were unhappy with such “radical changes”.
He said minimum wages were needed when the government was confronted with figures that showed nearly 33% of Malaysian workers were earning less than RM700 a month.
Pakatan’s RM1,100 recommendation
The council, established on Sept 15, is currently studying the rate and coverage of minimum wage according to sector, job type, area and territory.
This also includes taking into consideration other factors such as the current socio-economic situation, expenditure, inflation rate and comparing wage structures in other countries.
The council is an independent entity consisting of 23 members from workers and employers unions, government and non-governmental organization (NGO) and is chaired by former Chief Judge of Sabah and Sarawak Steve Shim Lip Kiong.
Recently, before Prime Minister Najib Tun Razak announced the national budget, Pakatan Rakyat’s alternative budget, announced by Anwar Ibrahim recently, stated that the opposition coalition intended to have minimum wage at RM1,100.
Below are excerpts from an exclusive interview with Dr S Subramaniam:
There were rumours that when the Prime Minister offered you the post, you were at first hesitant and rejected it. Is this true?
When I was appointed in 2008, Pak Lah (Abdullah Badawi) was the Prime Minister. The ministry that MIC held before was the Works Ministry, so of course the then president S Samy Vellu had actually requested that there should be continuity there. But when that was not given, there was a lot of rumours it could be any other ministry. Frankly, neither the party nor me were aware it could be the Human Resources Ministry. So when the prime minister clarified the reasons (for his decision), he said he felt that the issues of the Indian community in terms of skills, employment, training, and other issues – because they were mainly a working class – can be addressed by the ministry. To some extent that might have been right. It has some direct connection to some core issues pertaining to the Indian community, so whatever it is, the (appointment was a) prerogative of the Prime Minister. The rumours that I rejected it initially is untrue.
How was your transition from being a dermatologist to a minister?
Initially in 2004 I was appointed as parliamentary secretary to Housing and Local Government Ministry. I was a practicing medical specialist, and I felt that I wanted the experience of being a backbencher initially. It so happened that in that particular election, MIC won all the nine seats and the Prime Minister Abdullah Badawi gave posts for seven of us. That was the highest amount of government post MIC had in history. One minister, three deputy ministers and two parliamentary secretaries. So at the time I had some hesitations, because (it was a) sudden transition.
From then on?
I became the party secretary, (was) elected as vice-president (and then after the 2008 general election) I was elected as MIC minister, because among three people who won, I got the highest votes. There were people who were more senior to me who lost – the president, the deputy president, and the vice-president who contested, they all lost. I was the secretary-general. I was nominated as the representative of the party as a minister, that’s how it happened. So 2008 was a shock to us, I could not believe how many of us lost, none of us expected this. Pursuant to that, we’ve accepted the lost. That dented the party very badly. And for that last few years, we’re seeing the dent slowly getting better. The image of the party is getting better.
As a first time minister in the Human Resources Ministry, what were the challenges that you faced?
This is a very important ministry because 1) it provides for the harmony of industrial relations in this country; 2) It has to ensure and regulate the manpower requirements of the country.
Based on these two clear objectives, in the last three years, we’ve actually made quite a lot of changes to the nature and future of workers, in line with concept of harmony. Many (of these) changes (had) never (been) done before.
Some of the radical changes include introducing minimum wage for Malaysia, which is something that is met with a lot of opposing views and ideas and we managed to actually push it across and convince those who are not supportive of it to accept it.
You have mentioned that another issue the ministry is looking closely at is the retirement age, what is being done so far?
We’re now in the middle of drafting a bill to actually fix a retirement age for the private sector. Now it is currently left to individuals. The employer and employee determine (the age as) it is now stated. By and large a lot of employers use 55 years of age (as the time of retirement).
(But) the government has changed, they have improved initially from 55 to 58 and now (have) announced 60 (years). We’re now telling the private sector, look here you cannot be sticking to 55 and you have to change. To impose that, we need legal power. That’s the reason why we’re creating a law to look into this.
Why is there a need to increase the retirement age in the private sector?
The same reason why government decided to do it. Because the lifespan of Malaysians has increased. Age 55 was fixed when our lifespan was between 55 to 65 of years of age, many years ago. (Better) health facilities and improvement of lifestyles have improved our longevity. So people at 55 are still very young, are still able to contribute and now live for a longer period of time.
If you ask them to retire, and be economically non-productive for a long time, its going to be challenging for them. Because the savings which they have probably wouldn’t be sufficient to carry them for a long time. Assuming they retire at 55, and live another 20-30, they wouldn’t have enough savings to cater to all their needs.
So because of that, we needed to increase the productive age group. So this will shorten the period post-retirement, and increase the amount of savings. It’s a global issue and most parts of the world has responded to it, we haven’t.
Of course, with any new proposal, there are proponents and opponents. So that’s why in our ministry, everything we discuss with stakeholders, we don’t impose decisions (made) by ourselves. So we are now having discussions.
Some concerns that have been raised by the workers group, and we’ll see how we can address them so at the end when it is implemented everybody would be able to accept it.
When will the new retirement age to be implemented?
We wanted to do it in this parliament seating itself, but because of these issues (raised by workers), we are still continuing discussions. Once those problems (which were) highlighted have been addressed we will go ahead. We are now aiming for the next parliament session.
These aside, what are some of the other changes you’ve brought about in the ministry since assuming office in 2008?
We’ve recently also passed a regulations on part-time jobs last year. This is to provide for greater flexibility for workers, particularly ladies,to contribute to the labour force. It allows someone who wants to work but has other obligations, to work part-time and at the same time manage their families.
We hope that management and enterprises will create jobs that are of this nature. It is actually in their interest, because there is a lot of skills outside which can be utilized, if they allow people to come in to work 4-5 hours and go home. Rather than having such a stereotyped mind that a worker must come in the morning and stay until late evening and go back.
(Another change is in) the area of sexual harassment in work place. This has been addressed by amendments in Employment Act. We are in the process of addressing the abuses in the contract labour system and hope to come out with suitable guidelines in addressing this issue.
Another (change) is the processing of applications and approvals in Perkeso (also known as Socso). This has been streamlined and the time taken shortened tremendously. Perkeso’s offices are opened in weekends to ensure greater accessibility.
A Return To Work Program has been started under Perkeso to ensure optimal rehabilitation of injured workers and to ensure their early Return To Work. A rehabilitation center is being built in Malacca to provide modern and up-to-date facilities in the field of rehabilitation.
We are reviewing present Perkeso benefits and how the processes can be improved and greater benefits be given to the workers.
Human Resource Development Center has been started under the PSMB and will contribute towards better and more modern management of human resources in SME’s and lead to increased productivity.
We feel modernization of human resources management will lead to better management and increase productivity amongst the SME’s.
In the area of Skill Training; we have setup a council to provide a better coordination, rationalization and optimization of resources amongst the various skill training providers in the country. From being supply driven, we are transforming skill training to be demand driven.
Greater involvement of the industry in skill training will ensure the skill sets will meet the present and future demands of the industry. Additional funds have been given to provide training for unemployed graduates, school-leavers and dropouts.
A new program has been introduced to allow greater opportunities for Malaysian workers to upgrade and update their skills.
Also, the time taken for resolutions of industrial relations disputes has been reduced tremendously. We are having serious discussion with the stakeholders to reduce the time taken to resolve the disputes,including the time taken to refer cases to the industrial court.
