KUALA LUMPUR – Salaries have not been tracking productivity for many years, which runs contrary to the perception that a guaranteed living wage is a burden.
Umno information chief Shahril Sufian Hamdan is of the belief that a guaranteed living wage scheme in Malaysia will not hurt the nation’s labour productivity.
Speaking to The Vibes, he said there are concerns about whether such a policy will decrease worker productivity.
However, he believes that the scheme will relieve workers of their financial burden, which could possibly increase productivity.
“Looking at what has been done in other countries, such a policy has not reduced labour productivity.
“In any case, wages haven’t been tracking productivity anyway, so it is the wrong question to even ask.”
He acknowledged that the scheme is not a one-off solution to the nation’s economic woes.
“To be clear, this will not replace the need to continue stimulating the economy, attracting private investments, and other efforts,” he said, adding that the guaranteed living wage scheme must be accompanied by other similar policies.
Shahril gave the example of capping the salary ratio of employees and executives to reduce wage disparities.
“Other policies, like supervising and setting rates for the increase in labour wages, must also be implemented. Take the example of the Fair Works Commission in Australia, where it sets the rate of the annual wage increase by employers based on sector, economic conditions, and profits.”
He said this ensures employers do not refrain from increasing wages just because the government is topping up workers’ salaries.
Whether or not such policies require an increment in the nation’s taxation rate, he reminded that the government is already spending on cash handouts and various other welfare policies, which should decrease upon the implementation of a guaranteed living wage scheme.
If it is still not enough, then the country needs to decide if it is willing to implement more progressive taxation – like a wealth tax, inheritance tax, capital gains tax – which will not only fund these programmes, but also decrease the wage gap between the T20 and B40.
“I think it is worthwhile – but that’s an argument that needs to be had and won.”
At the heart of the funding question is also the realisation that, in essence, the government has the ability to spend, the limit of which is inflation, and not insolvency, he said.
What the government chooses to spend on, then, is the question.
“For programmes like this, hopefully, people will see it as more of an investment capable of bringing returns, not just financially, but also through the quality of life for the people. Hence, I think it is a worthwhile investment.” – The Vibes, April 23, 2021
