Freedom, GEABSOLUTE POWERS CORRUPT ABSOLUTELY, General Election (GE15), Malaysia, Politics, polling Nov 19: Destroy Umno for the betterment of Malaysia, race, religion, Solidality, support Aliran for Justice
Click to enlarge: http://clips.thestar.com.my.s3.amazonaws.com/clips/business/Business%20Pg6-0305.pdf
The economy continues to chug along just fine even as it recorded the first inflation of the year in March. The consumer price index (CPI) rose 0.2% in March 2019 from the previous year.
The recovery away from a deflation in the previous two months was driven by the transport and the food & non-alcoholic beverages components of the CPI.
MIDF Research said in its report that the country's consumer inflation is likely to stay low following the lower capped prices of RON95 and Diesel at RM2.08 and RM2.18 per litre respectively.
Nevertheless, it said that the demand-push factor remains firm amid stable job market and steady wage growth.
Meanwhile, labour force growth has maintained at 2.1% year-on-year (yoy) in Feb 2019 while employment growth inched down to 2.1% yoy while jobs added in the economy was recorded at 34,000.
It noted that the number of unemployed people officially increased by 1.6% yoy.
But it noted also that growth in both the labour force and employment continued to outpace unemployment growth for the last 24 months since Mar 2017.
"The stable job market reflects healthy development of Malaysia’s economy and provides solid support to domestic demand," the research house said.
Meanwhile, exports dropped 5.3% yoy in Feb 2019, the lowest in more than two years mainly due to a short calendar month on top of the long Chinese New Year (CNY) holidays.
Imports also fell and it declined more than exports at 9.4% yoy.
During the CNY holidays, all Chinese factories were shut down with most of them closed one or two weeks prior to the festive holidays. As the celebration put a halt to mass production, it disrupted the global supply chain resulting in a weak trade performance.
All sectors recorded a negative exports growth: agriculture (-13.7% yoy), manufacturing (-4.3% yoy) and mining (-5.5% yoy).
Despite the poor exports and imports figures, trade surplus maintained at above RM11bil in Feb 2019.
When compared with the previous month, both exports and imports contracted by 22% and 24.8%
respectively.
Most workers not paid enough to achieve minimum acceptable living standard
Wages too low, says Bank Negara - Survey: most workers not paid enough to achieve minimum acceptable living standard
ALTHOUGH the income levels of Malaysians have increased significantly over the years, voices of discontent are mounting over the decline in purchasing power.
Low and depressed salaries are among the grouses of executives and non-executives amid the apparent lifestyle changes of Malaysians.
With the rising cost of living, they lament that there is now less room for long-term savings and investments.
According to the Employees Job Happiness Index 2017 survey by JobStreet.com, one in three Malaysian employees want a pay rise, with rewards constituting 52% of the domestic workforce’s motivation to work.
In its 2017 Annual Report, Bank Negara points out that the expenditure of the bottom 40% (B40) of Malaysian households has expanded at a faster pace compared with their income.
From 2014 to 2016, the average B40 income level grew by 5.8% annually, marginally lower than the 6% growth in the B40 household spending in the same period.
It is also worth noting that half of working Malaysians only earned less than the national median of RM1,703 in 2016.
The central bank, in consideration of the low-wage conundrum, has recently recommended that employers use a “living wage” as a guideline to compensate their employees for their labour.
Essentially, the living wage refers to the income level needed to achieve a minimum acceptable standard of living, depending on the geographical location.
Citing Kuala Lumpur as an example, Bank Negara estimates that the living wage in the city two years ago was about RM2,700 for a single adult. The living wage estimate for a couple without a child was RM4,500, while for a couple with two children, the living wage was RM6,500.
As much as Malaysians support higher wages, which can outgrow escalating living cost, the bigger question is whether their employers are willing to increase wages significantly.
Also, is it realistic for employers to pay higher salaries in line with the suggested living wage?
Speaking to StarBizWeek, Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan says that the living wage is unsuitable for adoption in Malaysia – for now.
He believes that the living wage will turn out to be damaging to the domestic labour market, given the rising cost of doing business in recent times.
<< Shamsuddin: While employers in Malaysia are more than happy to compensate workers for their work, people must also understand that they are bogged down by escalating costs.
Shamsuddin: While employers in Malaysia are more than happy to compensate workers for their work, people must also understand that they are bogged down by escalating costs.
“The living wage concept is unrealistic in Malaysia for the time being. While employers in Malaysia are more than happy to compensate workers for their work, people must also understand that they are bogged down by escalating costs.
“However, if the workers are proactive and upskill themselves to increase their productivity, then I do not see any reason for employers to refrain from offering higher pay packages.
“The Government on its part, should not micro-manage the economy to the extent of telling the employers how much to pay their workers. Instead, the Government can provide various incentives to the employers to bring down costs, which will translate into higher salaries or even exempt the employees’ bonuses from tax,” he says.
Socio Economic Research Centre executive director Lee Heng Guie welcomes Bank Negara’s living wage guideline “to prevent a wage employee from the deprivation of a decent standard of living”.
In order to push for the acceptance of a living wage in Malaysia, Lee recommends that government-linked companies (GLCs) adopt the concept gradually.
“The enforcement of commitments toward the living wage is a complex and costly issue, and more importantly, should be paid voluntarily by the employers.
“This would require extensive consultations and engagements with the stakeholders.
“Perhaps, as one of the largest employers in the country, GLCs can incorporate the living wage clause in their suppliers’ procurement contracts,” he says.
Concerns about Malaysia’s low-wage environment are not only centred on the low-skilled workers but across-the-board, as even executives lament about being lowly-compensated.
Are Malaysians being paid enough?
Based on data from the Statistics Department’s Salaries and Wages Survey Report 2016, most Malaysian workers are still paid significantly lower than the desired amount to achieve “minimum acceptable living standard”, at least in Kuala Lumpur.
Nearly 50% of working adults in Kuala Lumpur earned less than RM2,500 per month in 2016, notably lower than the RM2,700 living wage as suggested by Bank Negara.
In fact, up to 27% of households in Kuala Lumpur earned below the estimated living wage in 2016.
While wage growth has exceeded inflation over the years, real wage growth has been largely subtle. Real wage refers to income adjusted for inflation.
According to the MEF’s website, the salaries of executives were expected to grow by 5.55% in 2017, compared with 6.31% in 2013. As for non-executives, the average salary was anticipated to increase by 5.44% in 2017, down from 6.78% in 2013.
Given the 3.7% headline inflation registered in 2017, executives’ salaries may have just inched up by 1.85% on average, after factoring in inflation.
As for non-executives, their real wage could have grown by 1.74%, lesser than the executives in Malaysia.
While a slight moderation in headline inflation is expected this year, the purchasing power of Malaysians is unlikely to improve significantly.
In an earlier report by StarBiz, Shamsuddin described 2018 as a “bad year for employees and employers”, and projected Malaysians’ average salary increment to be lower than last year.
He blamed several new policies and measures introduced by the government such as the mandatory requirement for employers to defray levy for their foreign workers and the introduction of the Employment Insurance System, which would increase the costs borne by domestic businesses.
“It will be difficult for employers to raise salaries after this, given such dampeners,” he was reported as saying.
The biggest challenge now is to strike a balance between the market’s ability to compensate a worker and the worker’s required income level to achieve a minimum acceptable standard of living.
Sunway University Business School professor of economics Yeah Kim Leng says that more efforts have to be made to enhance the business and investment climate, in order to entice existing firms to expand and upgrade while new firms and start-ups emerge to create more high-paying jobs.
<< Yeah: A good quality and inclusive education system coupled with sound economic policies and effective implementation have enabled the two countries to sustain growth.
Yeah: A good quality and inclusive education system coupled with sound economic policies and effective implementation have enabled the two countries to sustain growth.
He also calls upon business owners and employees to forge appropriate wage-setting mechanisms, which are benchmarked against the productivity of the workers.
“The Government should consider additional fiscal incentives for firms that provide worker benefits to meet the living wage standard. For example, double tax deduction for transport allowance and other cost of living adjustments for the lower-salaried employees,” states Yeah.
Meanwhile, Lee opines that employees should be given a higher share of the profit generated by their employers moving forward, in line with the practice in many high-income nations abroad.
“It is actually reasonable for Malaysian employers to allocate a larger chunk of their profits to reward their workers and motivate them,” he says.
In 2016, the compensation of employees to gross domestic product (CE-to-GDP) ratio in Malaysia improved to 35.3%. The CE-to-GDP ratio shows the workers’ share in the profits made by business owners.
For every RM1 generated in 2016, 35.3 sen was paid to the employee and 59.5 sen went to corporate earnings, while five sen was given to the government in the form of taxes.
In its 11th Malaysia Plan, the Government aspires to increase the CE-to-GDP ratio substantially to 40%, from 34% in 2013.
While Malaysia’s CE-to-GDP ratio has continued to improve over the years, it is notably lower than several other high and middle-income countries.
The 11th Malaysia Plan document stated that the country’s CE-to-GDP ratio was lower than Australia (47.8%), South Korea (43.2%) and even South Africa (45.9%).
In an earlier media report, however, Malaysian Institute of Economic Research executive director Zakariah Abdul Rashid hinted that Malaysia was unlikely to reach its CE-to-GDP ratio target by 2020.
This was mainly as a result of Malaysia’s lower-than-expected productivity growth.
Low-wage conundrum
According to Bank Negara, the main underlying cause of Malaysia’s low-wage environment is the high numbers of cheap foreign workers.
Governor Tan Sri Muhammad Ibrahim says that the country should cut back on its foreign worker dependency to drive higher wages for Malaysians across-the-board.
“In Malaysia, our salaries and wages are low, as half of the working Malaysians earn less than RM1,700 per month and the average starting salary of a diploma graduate is only about RM350 above the minimum wage.
“It is high time to reform our labour market by creating high-quality, good-paying jobs for Malaysians,” he says.
Echoing a similar stance, Yeah says that the continuing reliance on foreign workers has resulted in a predominantly low wage-low productivity-low value economy, with many features of a middle-income trap.
“On one end of the wage-skill spectrum, the low-skilled jobs are being substituted by easy availability of unskilled foreign workers, thereby keeping the blue-collar wages from rising.
“At the other end, skilled job wages are being depressed by insufficient high-wage job creation, weak firm profitability amid rising market competition and excess capacity, industry consolidations and other factors resulting in a slack labour market,” he says.
<< Lee: The enforcement of commitments toward the living wage is a complex and costly issue, and more importantly, should be paid voluntarily by the employers.
Lee: The enforcement of commitments toward the living wage is a complex and costly issue, and more importantly, should be paid voluntarily by the employers.
It is worth noting that the share of high-skilled jobs has reduced to 37% in the period from 2011 to 2017, as compared to 45% from 2002 to 2010.
Malaysia has come a long way since its independence, transforming itself from a largely rural agragrian country to a regional economic powerhouse, which is driven by its strong services and manufacturing sectors.
While industrialisation and automation have grown robustly since the 1990s, economists feel that the country has not managed to substantially move up the value chain compared with other countries such as Singapore.
The lack of a high-skilled workforce, low productivity, employment opportunities to cater to high-skilled professionals and the presence of cheap foreign workers have all weighed down on the Malaysian economy, particularly the income levels of Malaysians.
Citing the examples of Singapore and Australia, which are successful in raising wages historically, Yeah says that structural reforms should be undertaken in Malaysia to reverse the low-wage conundrum.
“A good quality and inclusive education system coupled with sound economic policies and effective implementation have enabled the two countries to sustain growth, raise productivity and wages and shift to higher-value activities,” he says.
Sources: by Ganeshwaran Kana, The Star
Economist: Manage labour issues to achieve high-income economy
Cheap manpower: While Malaysia has clearly
benefitted from the presence of foreign workers, the role that foreign
workers play in the Malaysian economy must keep up with the times.
WHY are wages still low in Malaysia?
Well, there are six words to describe the main reason for this – “high dependence on low-skilled foreign workers”.
The issue of Malaysia’s huge reliance on low-skilled foreign labour has been raised time and again, but only moderate progress has been made in alleviating the situation.
Low-skilled foreign labour remains a prevalent feature of Malaysia’s economy, and according to Bank Negara, it is a major factor suppressing local wages and impeding the country’s progress towards a high-productivity nation.
As the central bank governor Tan Sri Muhammad Ibrahim puts it, Malaysia is currently weighed down by a low-wage, low-productivity trap, with the contributing factor being the prolonged reliance on low-skilled foreign workers.
While their existence may benefit individual firms in the short term, they could impose high macroeconomic costs to the economy over the longer term.
“Easy availability of cheap low-skilled foreign workers blunts the need for productivity improvement and automation. Employers keep wages low to maintain margins,” Muhammad says.
“Unfortunately, this depresses wages for local workers. The hiring of low-skilled foreign workers also promotes the creation of low-skilled jobs,” he adds.
From 2011 to 2017, the share of low-skilled jobs in Malaysia increased significantly to 16%, compared with only 8% in the period of 2002 to 2010. Apart from that, local economic sectors that rely on foreign workers such as agriculture, construction and manufacturing also suffer from low productivity.
Nevertheless, it is an undeniable fact that foreign workers do contribute somewhat to Malaysia’s economic growth.
The World Bank, in its study about three years ago noted that immigrant labour both high and low-skilled, continued to play a crucial role in Malaysia’s economic development, and would still be needed for the country to achieve high-income status by 2020.
The global institution’s econometric modeling suggested that a 10% net increase in low-skilled foreign workers could increase Malaysia’s gross domestic product (GDP) by as much as 1.1%. For every 10 new immigrant workers in a given state and sector, up to five new jobs may be created for Malaysians in that state and sector, it said.
Even so, the World Bank acknowledged that the influx of foreign labour did have a negative impact on the wages of some groups.
Its study found a 10% increase in immigration flow would reduce wages of the least-educated Malaysians, which represents 14% of the total labour force, by 0.74%. Overall, a 10% increase in immigration flow would slightly increase the wages of Malaysians by 0.14%.
According to Muhammad, while some argue that foreign employment creates economic activities, which consequently create jobs for local employment, it is neither the most efficient nor the desired route to create more mid-to-high-skilled jobs.
“Compared with local employment, foreign workers repatriate a large share of their incomes, which limits the spillover or multiplier effect on the domestic economy,” he explains.
Total outward remittances in 2017 stood at RM35.3bil, of which the bulk was accounted for by foreign workers.
In addition, Muhammad says high dependence on low-skilled foreign workers will also have an adverse effect of shaping Malaysia’s reputation as a low-skilled, labour-intensive destination.
Bank Negara says while Malaysia has clearly benefitted from the presence of foreign workers, the role that foreign workers play in the Malaysian economy must keep up with the times.
The central bank believes critical reforms to the country’s labour market are very much within its reach, and it should continue to gradually wean its dependence on foreign workers.
Malaysia should seize the opportunity now to set itself on a more productive, sophisticated and sustainable economic growth path, it says.
According to Muhammad, cutting back on foreign worker dependency can help to drive higher wages for Malaysians across-the-board.
The Government’s efforts in reducing the country’s dependency on low-skilled foreign workers have been ongoing since the implementation of the 8th Malaysia Plan (2001-2005), with greater clarity and a renewed focus to resolve the issue at hand upon the implementation of the 11th Malaysia Plan.
This has resulted in the steady decline in the share of documented foreign workers from 16.1% in 2013 to 12.0% of the labour force in 2017.
More can be done to build on the progress made, Bank Negara says, while proposing a five-pronged approach to managing foreign workers in Malaysia.
Firstly, it says, there must be a clear stance on the role of low-skilled foreign workers in Malaysia’s economic narrative. Secondly, policy implementation and changes must be gradual and clearly communicated to the industry.
Thirdly, existing demand-management tools (such as quotas, dependency ceilings and levies) can be reformed to be more market-driven, while incentivising the outcomes that are in line with Malaysia’s economic objectives.
Fourthly, there is room to ensure better treatment of foreign workers, be it improvements in working conditions or ensuring that foreign workers are paid as agreed. Lastly, it is also important to note that the proposed reforms must be complemented with effective monitoring and enforcement on the ground, particularly with respect to undocumented foreign workers.
An economist tells StarBizWeek that addressing the high reliance on foreign workers is pertinent for Malaysia’s transition into a high-income economy.
“Malaysia needs to shift its focus from importing cheap labour to managing labour flow that can maximise growth and facilitate its structural adjustment towards a higher income economy,” he says.
“It has been far too long for our economy to be swamped with foreign workers who are unskilled, or have low skill sets that could not contribute meaningfully to Malaysia’s aspiration of becoming a high-income economy,” he adds.
Apr 6, 2016 ... So if both the US and Malaysian Governments couldn't stem the fat tide in their
respective countries, who can? ... Putrajaya the obese-city!
Full-time jobs? Pfft. Who needs 'em when you can freelance at home in your jammies?
ONCE upon a time, it was only natural to seek and secure a stable
job after you graduate, preferably with an established company where you
can build your resume based on the reputation of the company.
But now, with the culture of the modern workforce, where demands are
high and speed of work is essential, we are seeing the rise of
“independent workers” – aka freelancers.
Malaysian Emoployers Federation executive director Shamsuddin Bardan
said there has been a “rapid growth” in freelancing in Malaysia,
especially with work that can be done online.
He said: “Freelancers have more freedom and flexibility. For some it
is about following their passion and being their own boss, while at the
same time earning some income.”
According to a PC.com article earlier this year, since Malaysians
started using the Freelancer.com website in 2009, over 27,000 freelance
jobs have been posted, and over US$851,000 earned by freelancers.
Most of the jobs originate from the Klang Valley, with Malaysian
employers mainly hiring freelancers from South Asia. In line with the
growth of ICT industries, the most popular projects are software
architecture, MySQL and software testing.
The freelance generation
For graphic designer and videographer Zermi Ng, 25, being a
freelancer had not only helped him become more productive, but also
given him more free time.
“As a freelancer, I usually take about two to eight days to complete
a film, and whatever time I have left is usually free for me to do what
I want,” he said.
Ng said he could spend just a week to deliver a production and get
the same monthly salary he would with a nine-to-five job with five days a
week in the office. “The only problem is you might not get a job every
month,” he said.
Shamsuddin said: “People who don’t want to be bound by the strict
9am to 5pm working hours would usually choose the freelancing path. But
not all jobs can be done by freelancers.
“They usually are professions in the creative field like designers and copywriters, as well as IT or enginering professions.”
He pointed that more companies are now attracted to this new form of hiring and moving away from traditional employment.
The benefits for employers, he said, is they can “save on benefits
and statutory payments” while maintaining a lean workforce and meeting
bursts in demand.
“For example, a company who specialises in food and beverage will
not need to hire a full-time web developer just to set up a website. In
fact, the web developer doesn’t even need to show up to the office.
“By hiring full-time staff, there is space reduction, and more
budget spent on benefits. If you hire a freelancer, it’s a win-win
situation. Freelancers get the freedom they want and companies don’t
need to spend on office space.”
According to Sam Haggar, the Malaysia country head of human resource
consulting firm ManpowerGroup, freelancing is becoming a trend because
more young people like the lifestyle that comes with it.
“The lifestyle of being able to be anywhere at any time while
working is becoming more and more of a trend. There is also no
geographical boundary when it comes to delivering their work.”
Fashion photographer Bibo Aswan, 24, started his freelance career in
fashion photography and potraiture while studying in Form Two. Before
he even graduated with his diploma in photography, he already had a
handful of clients to start with.
Freelance fashion photographer Bibo Aswan
hopes to work with a photography studio in the future to gain more
professional experience and gain access to better equipment.
Even during his internship with a photography studio, he found that
he preferred a more flexible working schedule. “I could actually
continue to work with the studio full-time, but I chose not to. By
freelancing, I don’t actually have to work everyday.”
A price to pay
It is important to note that there is a difference between freelance
and part-time workers. Part-timers are employees who are entitled to
all company benefits and social security like EPF and Socso, but with a
lower level of commitment.
But of course, freelancers usually enjoy more freedom and
flexibility. In the eyes of the law, however, they have very little
leverage against their employers. And on top of that, their income is
rarely as stable as that of a full-time or part-time employee.
“Freelancers are paid for their work but they have almost no
benefits and have no rights of employment apart from a contract between
the employer and the freelancer,” said Haggar.
According to Shamsuddin, there also have been cases where
freelancers were scammed and cheated for their services. “There are
‘companies’ and ‘employers’ out there targeting freelancers. They ask
for your services and then disappear without giving you payment.”
Shamsuddin said freelancers ought to be careful in dealing with
their employers as they might encounter bogus companies or scams. It is
vital for a freelancer to request for a civil contract, and also to
check the employer and company’s background before committing to a job.
Through both freelancing and working as an employee, filmmaker
Joshua Chay, 27, discovered what he wanted to achieve in his career.
Filmmaker Joshua Chay took his freelance career to the next level by starting his own production company called The Spacemen.
“I didn’t see myself working for a company because I wanted to be my
own person. In that way I’m able to produce the kind of work I like and
I’m passionate about,” said Chay.
Although Chay pursued a freelance career in filmmaking, he was
working with many types of clients – including some he didn’t
particularly enjoy working with.
“The biggest thing about my freelance career was that it was
growing, and fast. But through the jobs, I realised what kind of work I
didn’t want to do. So from there, I began to pick my clients and produce
the type of work I enjoy and am actually good at,” said Chay.
Haggar added: “That’s one of the great advantages freelancers have – they get to choose their clients and enjoy their work.”
The path to entrepreneurship
Eventually, freelancing became a stepping stone for Chay to venture
into something bigger – starting his very own company. He realised the
importance of expanding his services, as well as presenting a higher
credibility to clients, which is why he founded his own company, The
Spacemen, with two other friends.
Ng had also taken steps to expand his services by starting his own
company, Mime Studio. “Starting a company will attract more clients, and
it makes it easier for us to convince them,” he said.
But on the flipside, despite the liberty freelancers have, Haggar
said they often lose out on the mentorship you get from having a
superior, and learning from other colleagues. “This form of working may
cause young freelancers to be less business-savvy and structured,
because they are without guidance.”
Because of this, Bibo plans to work with a professional photography
studio in the near future. “I want to do that so I can learn the
business side of things. Plus, a professional studeio would also have
better resources, like proper production equipment.”
That’s one of the reasons why Chay spent around three years
freelancing before he started his own company. He wanted to learn
everything from scratch, from the top to the bottom of the production
industry.
“Because I started out doing everything on my own, I had to learn
everything. And I realised after a while that starting a company was the
right move. Multi-national companies may not work with freelancers, but
they might if you’re a legit company,” he said.
Freelancers may have the liberty to work when, where and how they want,but they lose out on full-time benefits and social security.
Contributed by by Kevin Tan The Star/Asia News Network
Young people are finding typical nine-to-five office jobs less appealing, while companies are also realising the benefits of freelancers – more savings on office space and employee benefits.
