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Malaysia sets 1st minimum wage for private sector

By Eileen Ng
Associated Press / April 30, 2012
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KUALA LUMPUR, Malaysia—Prime Minister Najib Razak announced the first minimum wage for private-sector employees in Malaysia on Monday, saying it would benefit more than 3 million low-income workers.

Some small and medium-size businesses worried it would hurt their competitiveness.

Najib said the minimum monthly pay would be 900 ringgit ($297) for private-sector workers in peninsula Malaysia and 800 ringgit ($264) in the poorer eastern states of Sabah and Sarawak.

It will not include domestic workers such as maids and gardeners, he said.

Najib said a government survey in 2009 found that about 34 percent of the country's workers earn less than 700 ringgit ($231) a month, below the national poverty line of 800 ringgit.

"This is a special present from the federal government to all employees in our beloved country," Najib said in a televised speech on the evening before May Day, international workers' day.

"The introduction of the minimum wage is a historic moment for Malaysia. The lowest-paid will now be guaranteed an income that lifts them out of poverty and helps ensure that they can meet the rising cost of living," he said.

The announcement comes ahead of general elections widely expected this year. Najib has earlier given cash handouts to low-income families and raised the salaries of civil servants, and the minimum wage is seen as another initiative aimed at bolstering support for his ruling coalition.

There is no minimum wage for the public sector, but entry-level wages there are more than 900 ringgit a month, officials say.

Some employers warned the minimum wage would force some businesses to collapse and cause unemployment and inflation to soar.

Malaysian Employers' Federation director Shamsuddin Bardan said 98 percent of Malaysian businesses are small and medium-size and would be hit by the scheme.

"The 900 ringgit level is too high for those in small towns and remote villages. It will be a challenge for them to implement. Similarly for Sabah and Sarawak, wages will rise by 40 to 90 percent," he said.

"We feel the situation will be better managed if wages are linked to productivity and skills of employees," he said.

Najib said a World Bank survey showed that Malaysian wages rose an average 2.6 percent a year in the past decade, while labor productivity rose 6.7 percent.

He said a minimum wage would help Malaysia move toward its goal of becoming a high-income, developed nation by 2020. Small businesses will be given a one-year total grace period to adjust to the new system, he said.

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