Salaries must be able to support life, meaning that a major restructuring is called for, at least, at entry and minimum wage level if the cost of living cannot be contained.

THERE is no denying that the rising cost of living is a cause for concern. It is more so with the government — it wants to ensure that the welfare of the people is well looked after, and that they have enough to fend for themselves. To achieve this end, the Human Resources Ministry is conducting a study in an effort to determine the new entry level salary for every employment sector by district. It is, too, urging employers to accept the government’s proposal for a minimum wage of RM1,500 per month from the current RM1,000 in the peninsula and RM920 in Sabah, Sarawak and Labuan, while recognising that small firms might be forced to wind up as a result. Obviously, there is a dilemma: higher wages mean a higher capital outlay for small- and medium-scale enterprises, making survival more difficult.

Nevertheless, salaries must be able to support life, meaning that a major restructuring is called for, at least, at entry and minimum wage level if the cost of living cannot be contained. When the price of oil is stubbornly low, pushing the value of the ringgit down, making imports expensive, wages must go up or the standard of living will suffer and so will the quality of life. There is then a blatant contradiction facing employers: how to pay employees more while the cost of production is increasing? There is only one possible answer: increase in productivity. Performance must be stepped up to achieve optimal outputs.

Indeed, employers and employees must work together. Higher wages are an incentive towards increase in productivity. Only then can the economic activity be sustained when burdened with increasing production costs. Of course, it is expected that production must seek, wherever possible, to absorb local factors of production instead of imports to reduce costs. Production, irrespective of industry, must then seek to source whatever it needs locally, while labour must increase productivity. Only then can the economy sustain the increasing cost of labour without crippling industries.

Towards this end, the authorities responsible must facilitate. Multinational corporations are usually better able to support higher wages. Their participation in the economy must be further encouraged. For domestic firms, burdensome public policies must be dismantled to enhance efficiency. Import substitution must take precedence. Companies involved must be given an edge because they will not only benefit the country in the short to medium term, they will, in the long run, strengthen the real economy. In the final analysis, a salary upward revision at entry level and minimum wage is a necessity, given that young graduates now are comparatively worse off than those of two decades ago. Unfortunately, because money does not grow on trees, the government has to work out a mechanism that will not affect economic growth, yet provides every Malaysian with a decent quality of life. A fat wallet is not an indication of purchasing power. When life is affordable, a slim pocket book is all that is needed, hence, prices must also come down.

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