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Presented by Group 3 : Ashanee Mad-Ahin Phimpaporn Waeowanjit Naz Abdul Kareemarif Arif Rininta Nurrachmi The World Bank Report www.rininta-nurrachmi.blogspot.com

Malaysian Minimum Wage

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Page 1: Malaysian Minimum Wage

Presented by Group 3 : Ashanee Mad-Ahin Phimpaporn Waeowanjit Naz Abdul Kareemarif Arif Rininta Nurrachmi

The World Bank Report

www.rininta-nurrachmi.blogspot.com

Page 2: Malaysian Minimum Wage

Article Summary

Analysis of the Article

Survey of Related Article

Conclusion www.rininta-nurrachmi.blogspot.com

Page 3: Malaysian Minimum Wage

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Page 4: Malaysian Minimum Wage

Cons Pros

It will reduce poverty or

inequality

Promoting productivity

growth

addressing efficiency

issues in labor markets

Low wage because low

productivity

increase the salaries does

not improve equity in the

population

It has negative impact eg.

Sabah (mid-low levels of

productivity and high

costs of living)

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Page 5: Malaysian Minimum Wage

Labor Market in Malaysia is not fully competitive

There is existence of Monopsony in Malaysia Labor Market

Malaysia is foreign worker dependence

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Page 6: Malaysian Minimum Wage

The Possible effect of Min

Wage

Employment

Increase Informal

labor

Effect the adult

workers Effects on low-skilled

workers especially

women

Investment

Effect on FDI

Migration

Decline in the

demand for

migrant workers.

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Page 7: Malaysian Minimum Wage

Institutional Set Up

Analyze from 5 countries (Hong Kong,

Taiwan, Thailand, Chilie and S Korea)

Establishing the NMWC (New

Minimum Wage Council)

Same treatment between foreign

workers and Malaysian workers

Economic justification is

use for considering a

regional adjustment.

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Page 8: Malaysian Minimum Wage

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Page 9: Malaysian Minimum Wage

Input for policymaker

Comprehensive Information

Strength

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Page 10: Malaysian Minimum Wage

3 Weaknesses

There’s no distinction

for economic sector

From western Perspective

and Developed Countries

The countries studied did not

Malaysia

(Thailand, Hong Kong, Chile,

Taiwan, S Korea)

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Page 11: Malaysian Minimum Wage

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Page 12: Malaysian Minimum Wage

Report from World Bank for Malaysian

Government

Imply that the impact of Minimum Wage (MW)

will depend on the structure of the country’s

labor market.

Conclude that the impact of implementing

MW on most sectors in the country would be

minimal.

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Page 13: Malaysian Minimum Wage

“Does the Minimum Wage Affect Employment? Evidence from the

Manufacturing Sector in Indonesia” by Ximena Del Carpio, Ha

Nguyen,Liang Choon Wang (2012)

This paper investigates the impact of MW in Indonesia.

Using firm panel data from 1993 to 2006 (Source : Indonesia

Industry Survey)

The results show that MW has negative employment effects on

small firm but not large firm

The negative effect of MW is mainly concentrated more for less

skill workers than high skill workers.

The vulnerability is more accentuated for women than men

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Page 14: Malaysian Minimum Wage

There are similar effect of MW on

Indonesia & Malaysia

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Page 15: Malaysian Minimum Wage

Minimum wage

resemble essential

wage to fulfill Daruriyat

without overburdening

himself.

An Islamic Framework for Employer-Employee Relationships

by Akhtar (1992)

“Using minimum wage law as intervention in the labor

market for protection the interest of worker when market

imperfection exist. “

As well as promotion Masalih al-Ibad.

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Page 16: Malaysian Minimum Wage

An Islamic Framework for Employer-Employee Relationships by

Akhtar (1992)

Islamic state should determine minimum wage through a process of

tripartite negotiation where employers and the state are equally

represented and rules are laid down to ensure that workers receive

their due.

In line with the statement mentioned by the report World Bank

The World Bank recommend to have tripartite agreement as

reviewed from the studied countries (except Chile) as guidelines

for how Malaysia should operate.

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Page 17: Malaysian Minimum Wage

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Page 18: Malaysian Minimum Wage

Conclusion Recommendation

Increase Labor

productivity

Implement the policy

together with Islamic tools

Pros and Cons

Min Wage does not

guarantee

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