Focus View
Tread carefully on TVET minimum wage plan
FocusM team | 30 Mar 2018 00:30
It’s always a cost to employers when the government imposes a new minimum wage ceiling. It puts them in a quandary as their financial projections will be affected.
   
This is more so when the wage increase comes with no corresponding increase in productivity or skills level. The last time the government imposed a minimum wage policy a few years ago, there was an outcry from employers. 

Lately, it was proposed that a minimum monthly wage of RM3,500 be imposed for local Technical and Vocational Education and Training (TVET) graduates. Currently, their wages can range from RM1,200 to RM2,600.
  
The TVET qualification is considered lower than a diploma or degree. Thus, the minimum wage of RM3,500 will be a boon for such graduates as even degree holders are often paid below RM3,000.

The argument put forward is that imposing a minimum wage will put the wages of local high-skilled workers on par with that of foreign skilled workers who are paid RM3,500. Of course, a minimum wage is sometimes good so there will not be exploitation of local workers, especially when the supply of manpower exceeds demand. 

It was reported the majority of foreign skilled workers in the country were from Indonesia and China, and employed in the construction sector. Their employers have to get approval for the RM3,500 wage level from the Human Resources Ministry and Immigration Department.    

So why are companies willing to fork out RM3,500 when local skilled workers are cheaper? One reason could be because the TVET qualification is yet to be recognised by the Malaysian Qualification Agency (MQA). Foreign companies, especially, may also prefer to hire foreign skilled workers as they are familiar with their skills level. 
   
To address this, the government is setting up a TVET Council to coordinate the TVET programme. Graduates will also be encouraged to pursue diplomas and degrees. That’s a good start. 

But at the end of the day, it is up to the companies to decide who they want to hire. We cannot force them to employ local skilled workers or pay them more.

Local workers must prove that their skill levels are on par, if not better, than these foreign workers. In a free economy, it is market forces that should decide and not government policy. 

We don’t want to drive away foreign investors.           

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