From New Year’s day, all employers must comply with this policy which is part of the country’s journey towards becoming a high-income economy.
MINIMUM wages has a long history. The concept originated in 1894 in New Zealand and spread to United Kingdom in 1909.
To date, minimum wages is implemented in various forms in more than 90% of the countries in the world. The International Labour Organisation (ILO), in its Global Wage Report 2012/13, encourages member states to implement minimum wages as part of the Decent Work Agenda to reduce working poverty and provide social protection to vulnerable employees.
By definition, minimum wages places a ‘legal floor wage’ where employees shall not be legally paid lower than the minimum wages rate. The ‘legal floor wage’ forms the basis of all other statutory payments such as social security contributions, provident fund payments and overtime work payments.
ILO refers to minimum wages as a form of ‘safety net’ meant to secure employees a reasonable basic standard of living. Minimum wages is also intended to protect the low-skilled employees against exploitation and possibly as one of the many tools by the Government to reduce poverty and inequality in the labour market in respect of wage distribution.
Beginning 2013, Malaysia joined the league of nations implementing minimum wages. With the wisdom of Datuk Seri Najib Tun Razak, the Prime Minister of Malaysia, the Government picked enough courage and confidence to implement this policy.
The Minimum Wages initiative for Malaysia was announced by the Prime Minister in his Budget Speech on Oct 15, 2010. The policy is meant to ensure employees can meet their basic needs and create the necessary environment for industries to move-up their value chain by increasing the productivity of their employees through the use of technology and other innovations.