There are inequalities across all sectors in this country, and we need to adopt an institutionalized approach to address these problems once and for all!

Prime Minister Datuk Seri Anwar Ibrahim said the cabinet would discuss the issue of minimum wage scheme in near future in order to find a solution “once and for all.”

According to the prime minister, the implementation of the minimum wage scheme remains confusing and challenging.

Details of the plan to raise the minimum monthly wage from RM1,200 to RM1,500 proposed by the previous government last year were gazetted and implemented on May 1 last year.

The minimum wage scheme for micro companies hiring fewer than five workers, nevertheless, has been postponed over and again, and will not be implemented until July 1 this year.

Sure enough the implementation of the minimum wage scheme has been confusing, because the date of implementation is based on the number of employees!

The number of workers at SMEs could rise and fall, as we all know, and business owners might just try their utmost to control the number of their employees to not more than five in order not to implement the raised minimum wage.

Sure enough it is challenging in putting the scheme into effective implementation, as small businesses are making small profits, and many are barely surviving after the epidemic, with minimum wage rising by a hefty 25%. These business owners will invariably raise their objections, putting additional pressure on the new government.

Anwar said, “I hope employers, economic experts and ministers will not object to the minimum wage scheme, as the new government has the obligation to raise the wages of employees in the public and private sectors.”

The revision of minimum wage will not improve work efficiency, but fulfills the basic condition for employees to survive.

Without wage adjustment, existing employees may opt to quit, and it is hard for SMEs to recruit new workers at a monthly salary of only RM1,200. Consequently, micro businesses may fall out of the market in a vicious cycle.

The war between Russia and Ukraine, along with the coronavirus pandemic have sent inflationary pressure rising across the world.

The 3.3% inflation rate announced by the statistics department for 2022 should be way lower than what most rakyat actually feel.

For the B40 group, it will be even more difficult for them to sustain their basic day-to-day expenses. Consequently, the Anwar administration has no choice but to implement the minimum wage scheme revision soonest.

Malaysia’s per capita GDP last year was US$12,400, equivalent to RM55,000. Even if the minimum wage is adjusted to RM1,500 per month (or RM18,000 a year), it is still only 32.7% of per capita GDP but is acceptable.

Business owners should realize that raising the minimum wage will not significantly boost productivity. In the late 1950s, management guru Frederick Herzberg proposed the “Two-Factor Theory,” namely motivational factors and hygiene (or maintenance) factors; the former can stimulate employees to increase productivity, while the latter can only make employees “willing to work.”

Basic salary is only a maintenance factor. If you want to raise productivity, you will have to provide incentives such as performance bonuses, promotion opportunities, recognition, promising company prospects, training and growth opportunities, among others.

The PM has reminded employers to keep in mind the contribution of every employee regardless of their positions and levels, generously offering affirmation, recognition and praises which are exactly the motivation factors in Herzberg’s “Two-Factor Theory.”

So, employee productivity does not come from higher minimum wage, but incentives on top of basic salary.

American psychologist Abraham Maslow also classified human (employee) needs into five different categories, from lowest to highest: physiological (survival) needs, safety needs, love and belonging, self-esteem and self-actualization.

Very obviously, minimum wage will only meet the most fundamental “physiological needs” of employees. Productivity can only be improved by providing employees with opportunities for love and belonging, self-esteem, and self-realization at work.

Take the issue of contract doctors for instance. Today, they are trading their precious time for “basic needs of survival.” In Herzberg’s “Two-Factor Theory,” they do not get the essential motivation factors; and in Maslow’s theory of needs, it is not easy for them to meet even the most fundamental physiological needs, let alone self-esteem and self-actualization.

Minimum wage adjustments for micro businesses, salary adjustments for civil servants, the predicament of contract doctors … There are inequalities across all sectors in this country, and we need to adopt an institutionalized approach to address these problems once and for all!