Malaysia: The minimum wage farce

Palm oil plantation worker, Malaysia.

By Rani Rasiah

November 2, 2010 – On 1 May 1996, Jawatankuasa Sokongan Masyarakat Ladang (JSML), the plantation workers' coalition of Jeringan Rakyat Tertindas (JERIT, the Oppressed People's Network), launched the campaign for a minimum monthly wage for estate workers. It called for a total revamp of the highly exploitative colonial wage system which assigned estate workers a daily wage that was subject to market price, weather conditions and crop yield, all factors beyond the control of the worker.

Public support for the RM750 monthly wage demand grew as the campaign shone the spotlight on the scandalous contrast between the affluent yet rapacious plantation capitalists and the then 300,000 estate workers who lived in poverty and backwardness. What was more, it was revealed that the largest shareholder in every major plantation company was the government itself, in the guise of agencies such as Permodalan Nasional Berhad and  Amanah Saham Nasional.

A 2000-strong demonstration by estate workers outside parliament on April 19, 1999, managed to draw some response from the government and related quarters. In June 1999, the Malaysian Indian Congress (a communal political party and one of the founding members of the ruling Barisan Nasional coalition) announced it was submitting a report to cabinet asking for a monthly wage of RM900 to RM1000 for plantation workers.

In March 2000, human resources minister Dato Fong Chan Onn made a classic diversion when he announced that the government was getting experts from the University of Malaya to study the feasibility of monthly wages for the sector. That study which was completed later in the same year never saw the light of day, and anyone can guess why.

Subsequently, Dr Mahathir, the then prime minister, announced that the cabinet had agreed to the monthly wage in principle, and on February 7, 2001, on the eve of a big demonstration planned by estate workers outside the industrial court, Datuk Fong Chan Onn announced the decision to pay oil-palm plantation workers a minimum monthly wage of the grand sum of RM325!

Workers tricked

It was an anti-climactic end to the farce staged by the government but worse was to follow. The RM325 turned out to be a minimum wage guaranteed to workers who, despite reporting for work every day regardless of weather conditions, still made less than that amount. It was not a monthly wage as announced by the government! To this day, oil-palm workers continue to be paid daily, and bear all the risks of the industry.

Malaysian workers have been tricked in this way more than once by the government. In 1998, in a dialogue with the Malaysian Trade Union Congress, which was campaigning for a minimum wage of RM900 for industrial workers, Dr Mahathir remarked that a minimum wage of RM1200 should be implemented to cater for the needs of a family of five. That generous statement remained just that, but it kept workers on a high for a while before it was conveniently forgotten.

Against this background what hope is there that the current minimum wage acrobatics of the government will bear any fruit?

The issue has been in the news since the start of the year. Human resources minister Dr Subramaniam has announced that the minimum wage policy would be implemented by the middle of 2011. In mid-October, the minister reported that cabinet had approved the minimum wage policy "to be implemented through the National Wage Consultation Council". Also the government is seen to be trying very hard to coax employers to support the minimum wage. It is quoting statistics and offering arguments normally put forward by trade unions and other non-government organisations.

In August 2010 for example, the Human Resources Ministry revealed that the National Employment Return study of 2009 found that 34% of the total workforce in the country earned less than RM700 a month, i.e. below the poverty line of RM720, and that a further 37% earned between RM700 to RM1500. Human resources minister Dr. Subramaniam has argued that "salaries must commensurate with the increase in the price of goods and the higher standard of living".

All this looks very promising but given the track record of the government, there is much scepticism about its sincerity. The whole chain of events looks like the re-enactment of an old script with a bit of recasting.

The government’s credibility has been further eroded by recent developments. It has demonstrated its utter impotence when engaging with the corporate chiefs. Remember how the federal government’s promise of a pay hike for security guards by July 1, 2010, was irreverently dismissed by the employers’ union, the Security Services Association of Malaysia? And how did the government respond? It retreated meekly, saying the issue needed further study!

Who's boss?

More and more it is becoming clear who is boss around here, and the Tenth Malaysia Plan testifies that that exactly is what the government desires. Less government intervention, greater ease of doing business, a more business-friendly environment, the private sector as the engine of growth – the neoliberal mantra is all-pervasive in the plan.

The Malaysian Employers’ Federation has shown itself to be intransigent on this issue. One of its representatives has been quoted as saying, "even if the world is to come to an end, and we are born again, MEF will still strongly oppose a minimum wage". Denying workers their rightful wages seems to be a matter of principle for the MEF! It even fails to see what is after all the current capitalist prescription, that higher wages for workers will translate into a boost in buying power from which employers will benefit. In fact, the global economic realities of today have prodded heavily export-dependent economies to make fundamental shifts in policy by laying greater emphasis on domestic demand. In China for example, workers’ wages have been revised upwards in order to stimulate domestic demand to counter the likelihood of a decline in exports.

Under these circumstances then, how is one to view all this suspenseful sound and fury on the part of the government on the issue of a minimum wage? What is certain is that it is likely to drag on over a period of time, and if elections are on the cards, it will be used to win votes. And after that, it will be forgotten again.

However, there is a chance though that this time the minimum wage will materialise. The pressures are there. We are reminded by even establishment types that 90% of countries have a minimum wage and Malaysia is not one of them. Also the New Economic Model (NEM) vision of moving from a middle-income to a high-income country sounds rather obscene if it is to be on the backs of low- and poverty-line income workers.

Indeed the National Economic Advisory Council has cautioned that the reality of 40% of Malaysian households living on an income below RM1500 is untenable and can result in social and political instability.

Apart from these, the liberalisation measures initiated by the government this year in the form of the goods and services tax and the withdrawal of subsidies promise to further impoverish the working class. These along with proposed labour law amendments which threaten job security are hugely unpopular with the people, and the government has been forced to step back a little and do a rethink.

There is thus a chance that the government may institute a minimum wage. But the catch is it is likely to be merely cosmetic, and not a minimum living wage. As in the case of the plantation workers' wage issue, it is bound to be a let-down, with the minimum wage fixed at some ridiculously low figure below the poverty line.

[Rani Rasiah is a member of the Socialist Party of Malaysia's central committee as well as one of the founding members of the JSML.]