Malaysia has decided to set a minimum wage of M800 to M900 per month, depending on location
http://www.todayonline.com/World/EDC120313-0000053/KL-sets-minimum-wage-between-RM800-RM900
Two weeks ago, a newspaper reported that a complaint by Malaysian employers that a minimum wage will cause 90% of the workers in small companies to lose their jobs, as the profit margin of these companies cannot sustain the minimum wage.
The employers overlook an important fact. The minimum wage will apply to all businesses. Their competitors will also have to bear the higher cost. The higher cost has to be passed to consumers through higher prices. And the lower income earners can afford the higher prices, as they earn higher wages, due to the minimum wage.
An important outcome is that the rental component that is embedded in the prices will become relatively smaller, compared to wages. This is a good and fair outcome. It is better to have the proper balance between wages, rental and profit.
Without a minimum wage or other regulations protecting workers, the wages will be be depressed by market forces. This has led to the high disparity between the high and low income levels, i.e. the widening wage gap, whic his bad for society.
http://www.todayonline.com/World/EDC120313-0000053/KL-sets-minimum-wage-between-RM800-RM900
Two weeks ago, a newspaper reported that a complaint by Malaysian employers that a minimum wage will cause 90% of the workers in small companies to lose their jobs, as the profit margin of these companies cannot sustain the minimum wage.
The employers overlook an important fact. The minimum wage will apply to all businesses. Their competitors will also have to bear the higher cost. The higher cost has to be passed to consumers through higher prices. And the lower income earners can afford the higher prices, as they earn higher wages, due to the minimum wage.
An important outcome is that the rental component that is embedded in the prices will become relatively smaller, compared to wages. This is a good and fair outcome. It is better to have the proper balance between wages, rental and profit.
Without a minimum wage or other regulations protecting workers, the wages will be be depressed by market forces. This has led to the high disparity between the high and low income levels, i.e. the widening wage gap, whic his bad for society.
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