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Malaysia should follow Singapore’s tripartite system in combating wage stagnation: Think-tank

Malaysia should follow Singapore’s tripartite system in combating wage stagnation: Think-tank

KUALA LUMPUR — Malaysia should emulate Singapore’s tripartite system in addressing the issue of wage stagnation, the Invoke Centre for Policy Initiatives (I-CPI) has suggested.

In its handbook titled A Guide To Rebuilding Our Nation (Vol. 1), the think-thank highlighted certain policy overhauls to reforming the economy, correcting wage stagnation and addressing issues relating to job opportunities.

“The best example is Singapore which has government intervention via a tripartite joint pact (government, employers and workers) to ensure that there is a sensible increase in salaries annually, regardless of the state of the republic’s economy.”

Expounding further on Singapore’s National Wages Council, which oversees the salary increment agreed by the pact, Invoke said that any decisions announced by the council is widely respected as it is a result of a joint decision by all parties.

“In years whereby the economy is good, the employers’ representative would give in to the demands of the workers representative because of the companies’ high yields.

“In years when the economy is not good, the workers’ representatives would give in to their employers’ representatives’ demands, because they realise of the need to ensure their employers don’t go bankrupt to protect their workers,” Invoke explained.

“There are also times when the economy is terrible, so the Singapore government would give in and provide incentives or subsidies so that employers can still pay their workers a sensible salary increment,” the book’s authors, PKR vice-president Rafizi Ramli and ex-corporate lawyer Eric Lee wrote.

The duo said that this initiative is what led Singapore to outdo Malaysia in terms of average salary rates, after four decades, despite Malaysia having an edge when it started out economically strong after the formation of Malaysia.

In the report, Malaysia’s 2015 median salary was recorded at 6.7 per cent and in 2016, it was 6.4 per cent. Malaysia also became the third lowest in the region last year on real income increment rate at only 2.0 per cent, trailing behind India and Indonesia at 0.5 per cent and 1.3 per cent respectively after inflation.

“The problem of low salaries in Malaysia is a problem prolonging for decades owing to economic policies which favour economic growth rather than workers’ well-being.

“Firstly, the need to attract foreign investors to develop the manufacturing sector in the 1970s and 1980s led to fair wages being seen as an unattractive factor which can affect the attract factor for foreign investors into this country,” the authors wrote, adding that this belief continued to drive the country’s economy for decades, leaving workers marginalised.

The report highlighted that the projected salary increment rate for Malaysians this year is only 2.3 per cent, making Malaysia the lowest in the region compared to other Asean nations such as Vietnam which had the highest rate of 5.6 per cent, followed by Indonesia and Thailand with 4.6 per cent and 3.5 per cent respectively.

The report said that the median salary for Malaysians last year was RM1,703 (S$550), with the average salary being RM2,463.

Mr Rafizi and Mr Lee also proposed that Malaysia emulate Singapore by forming a National Wage Consultation Commission to fix annual salary increment rates, and incentives by the government as well as the injection of funds and giving relief and releases to ensure that the commission can continue its mandate.

The report said that only 8 per cent of Malaysians are part of a workers’ union, compared to 28 per cent in Singapore and 24.7 per cent in the United Kingdom.

The duo sad that this is also another reason why Malaysian workers enjoy only 35 per cent of the country’s economic pie, which is returned to them in the form of salaries. This, he said, is too low compared to other countries.

In the report, Mr Rafizi and Mr Lee said that 35 per cent of fence-sitters also have no loyalty to either political party and have no interest in politics altogether, with their main concern being livelihood and the economy. MALAY MAIL ONLINE