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Showing posts with label SMEs. Show all posts
Showing posts with label SMEs. Show all posts

Sunday 27 March 2022

Talent, wage growth and Koi’s law

Scholarship Programme – Great Eastern Life

http://my.gelife.co/scholarship
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SOCIAL media has been abuzz on the new minimum wage policy of RM1,500 announced by the government, which is slated to come into effect on May 1.
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For politicians, regardless of which camp one belongs to, there appears to be a consensus towards this policy’s implementation. It is after all a populist policy, hence to voice out vocally against it would be a public relations nightmare.
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Supporters for higher minimum wages can be seen to be largely employees and advocates of labour welfare.
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The key proponents against the new minimum wage policy was on the other hand largely from the business associations, manufacturers and small medium enterprise owners. In short, the employers.
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What is rather interesting from my observation is the high octane emotions expressed on social media, be it those for or against. Supporters of the new wage policy were completely aghast when proponents against it provided justifications to delay the implementation. Many resorted to name calling, where some were branded as capitalists, profiteers or bourgeoisie.
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There was even a viral social media posting on twitter with Tan Sri Soh Thian Lai’s remuneration as chairman of YKGI Holdings Bhd shared to depict the wealth disparity. He was in my view, unfairly targeted simply because he voiced out the views of the members within The Federation of Malaysian Manufacturers (FMM) in his capacity as the president of the association. Somehow, no reasons given were deemed acceptable by advocates of higher minimum wage.
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Low wage growth in Malaysia
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It is important to note that Malaysia has been caught in the middle income trap for the longest time. When former Prime Minister Tun Dr Mahathir conceptualised “Vision 2020”, it was our countries’ aspiration to achieve a high income nation status.
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Of course, the year 2020 came and left with my memory of it largely being watershed, much less anything remotely related to high income. So, the crux of our economy indeed has always been low wage and especially painful wage growth in the last decade.
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We need not look far, the past five years' statistics of our country’s mean and median monthly wages is sufficient to show a rather demoralising trend as per the attached chart. World Bank’s definition of a high-income nation for 2020 was a gross national income (GNI) per capita of US$12,696 (RM 53,532). Our country’s GNI last year stood at US$10,111 (RM42,503), which was an estimated 20% below the minimum threshold of the World Bank. While 20% apart may not seem like the Grand Canyon, however, we must understand there is a disparity of wealth gap between the high T20 and the B40. This is further exacerbated by the pandemic and slump in the economy for the past two years.
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As a former employee who worked for various corporate organisations, I can deeply sympathise with the predicament of entry-level and low-income employees.
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With access to remuneration information of the company, I notice the large income and employee benefits disparity between the senior management and the junior workers.
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There was once during a town hall meeting with senior leaders of the management, I raised a question anonymously, “How is it equitable that the more senior one is along the corporate hierarchy, apart from higher salary, one still gets much better employee benefits such as mobile, healthcare, petrol and others allowances, when in fact, it is the more junior employees with low income that are desperately in need of better benefits to supplement the income gap?” The human resource head of the company skipped my question.
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Is minimum wage the solution?
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On Jan 1, 2020, the minimum wage of RM1,200 came into force. This was right before the country was hit by the pandemic. Two and a half years later, in spite of the pandemic and series of lockdowns decimating many small-medium enterprises and businesses, the minimum wage would soon be raised to RM1,500. With a history of being vocal about employees’ welfare throughout my corporate tenure, I cannot help but feel that the situation at this point in time is not conducive for such a drastic jump.
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Although we did see a recovery of Malaysia’s gross domestic product performance in 2021 with a 3.1% increase compared to a contraction of 5.6% in 2020, it is necessary to understand that many businesses went out of business and the unemployment rate has increased significantly.
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In addition, the country’s borders, which is allowed to open on April 1 may provide a fresh catalyst for the economy recovery, the impact has yet to be felt by businesses as a whole. If 2022 is to be a recovery year, then business friendly policies need to supersede populist policies in the near term in order to provide some breathing room to recoup past losses.
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Furthermore, increasing business costs will add to the worsening domestic inflationary pressure resulting from global factors such as geopolitical tensions, supply chain disruption and loose monetary policies. Increasing cost without expanding the economy pool is simply discouraging reinvestment by the business enterprise, which is crucial towards growing the country’s economy. The multiplier effect of investment activity outweighs the effects of consumer spending. This is economy 101.
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Koi’s Law
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In season two of Dr Romantic, a popular Korean drama, a scene specifically mentioned an interesting theory known as ’Koi’s Law’.
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This theory provides that a Koi fish (which is a type of carp), grows in size subject to its environment. If you put it in a fish bowl, the Koi would be small fitting to the size of the fish bowl. If you put it in the pond, the Koi would grow much larger. This relates to people’s ability to change proportionally to the environment. If we give people the opportunity to grow, they will be able to expand on their respective ability. Wage is an important factor in determining such an outcome.
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Therefore, I do agree that wage growth should be commensurate with talent in order to retain the best minds which are crucial towards nation building. By having the best talent in the respective fields, our country would advance and naturally, this would help to further improve the quality of lives of the people.
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It is a cycle. I definitely do not disagree with reviewing and raising the minimum wage but it ought to be gradual and at a pace where the business owners and employers are given the equal opportunity to recover from damages suffered. Populist agendas should never have a place in formulating economic policies otherwise long term advantages will always take a backseat to short term gains.
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NG ZHU HANN By Ng Zhu Hann, the CEO of Tradeview Capital. He is also a lawyer and the author of “Once Upon A Time In Bursa”.The views expressed here are the writer’s own. 

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Sunday 7 February 2021

Changing with the times: Malaysian Chinese associations need to reinvent themselves

Countries since independence with a young history (less than 500 years) tend to have a vast number of naturalised citizens. The United States, Australia, Singapore and Malaysia are just some of the countries that gain independence from the colonial master at that time, Great Britain. Citizens by law have sworn allegiance to the country that hey live in and they have to abide by the laws of the country.


IN the blink of an eye, I turned 60 last year. I was born in 1960, just three years after Merdeka. I have been a Malaysian citizen from birth whereas my brother, who was born eight years earlier, had to go through a naturalisation process, from a red identity card to blue identity card to finally a naturalised citizen of Malaysia.

My father went through the same process even though he emigrated from China to Malaya in the 1930s. My mother was born in Jasin, Melaka, in the late 1920s and she too had to go through the process to become a naturalised citizen.

Countries since independence with a young history (less than 500 years) tend to have a vast number of naturalised citizens. The United States, Australia, Singapore and Malaysia are just some of the countries that gain independence from the colonial master at that time, Great Britain.

Nobody can force a citizen to leave the country but citizens can make personal choices should they decide to leave and emigrate to another country. Citizens leave because of economic or political reasons, and to escape domestic civil wars.

As a country that embraces democracy, Malaysian citizens above 18 years old have the right to vote.

One citizen, one vote. Voting trends in Malaysia since independence have been by race, for example, a Malay candidate for a Malay majority constituency and so forth.

If this voting trend continues, we will continue to see the same composition of politicians by race in our Parliament in the future.

Due to slower growth rate and naturalisation policies, the minority Chinese and Indians have, by percentage to population, been on a reducing trajectory – the Chinese from 37% in 1957 to 22% in 2020 and to 18% by 2040.

It is inevitable that there will be a diminishing Chinese voice in Parliament.

With a diminishing influence in the decision making of government policies, minority communities will face diminishing share of economic and educational opportunities in this country.

What then can the diminishing minority communities do to ensure a fair share of economic and educational opportunities for the next 60 years?

As a Malaysian Chinese going into my twilight years, I have no answer to this dilemma.

Perhaps the Chinese community, especially the younger generation, would like to start a conversation on this topic.

My only advice is that the conversation tone must be positive and reconciliatory and not confrontational. It must be a win-win strategy, never a zero-sum game.

The conversation should be centered on self help within the community if no help is seen coming. The dialogue must be about the Malaysian Chinese investing their loyalty into this country in the hope of a brighter future.

The discussion must focus on helping the poor of all races and to bridge the gap between rich and poor Malaysians. Only then will we have a stable and just society.

Lending a helping hand

Most immigrants from China in the early 1900s were housed, fed and given a job by their clansman upon arriving at the shores of Malaya. They were identified by their village, district, province and by their spoken dialects.

As such, in Malaya then and Malaysia until the 1990s, you can still identify the dialects with the trade and concentrated communities of the same province in particular towns.

Till today, the older generation of the same dialects share a special friendship-bond as it was with their forefathers

These individual communities then set up associations by dialect, first in townships and then grew into a national association. Leaders of the association were normally business and academic leaders of the community.

The associations helped their members (mostly uneducated) to deal with government matters, for example land matters, and offered scholarships to bright students as well as financial and welfare assistance to the poor and the elderly.

The various associations and the local rich donated to build schools and temples.

Like all associations and societies, sustainability over the long term depends on new membership enrollments.

But the younger generation has no interest in joining and now the association’s role in the community is diminishing as well.

How can these associations reinvent themselves to play the community leader role again, especially in this pandemic recession? Offering refuge to their clansman or the poor Chinese community at large like before?

Many unemployed families are having reduced or no income and have problems putting food on the the tables and paying rent for a roof over their heads.

Can the association and the immediate community distribute foodstuff to these families like the Foodbank model in the US? These people have no place to turn to.

The Chinese community leaders can play a bigger role in protecting the welfare of the Chinese community.

When no help is forthcoming, the leaders must step up, the younger generation must participate and contribute in whatever ways they can to help the community and that no clansman goes hungry and is left behind.

In my next article, I would like to discuss about education and career choices for the new generation of Chinese youth.

I would like to start a conversation about our Chinese SMEs who are suffering in silence and in clear desperation of financial assistance. I welcome all positive recommendations and ideas and you can write to starbiz@thestar.com.my. In the meantime, help your community by buying from your local SMEs and hawkers. Help the elderly and the poor by whatever means possible. Let us build a caring and supportive community.

That will be a good start. One small step towards the next 60-year journey.

by Tan Thiam Hock is an entrepreneur. Views expressed here are the writer’s own.

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Century-old clan associations need to re-invent themselves to stay alive