Monday, May 28, 2012

Minimum Wage Around The World

Reading this article this morning, I have to wonder just how people get their information (extract; emphasis added):

Unfair to implement minimum wage policy in Terengganu, say groups

KUALA TERENGGANU: Trade organisations in Terengganu have asked to be exempted from the planned minimum wage ruling.

They argue that the cost of living in the state is comparatively lower than in the more advanced states like the Federal Territory and Johor and so, the RM900 minimum wage would not be justified here…

…Speaking at a press conference here yesterday on behalf of the organisations, Terengganu Chinese Chamber of Commerce president Datuk Low Kian Chuan urged the Government to review the policy and study its effects on small traders and companies…

He added that in China, only selected regions had implemented such a policy while in European countries, minimum wage was unheard of.

China operates a local level not national implementation of a minimum wage – you can check the list of provinces and their minimum wage rates through Wikipedia. By my count (cross checked against the list of provinces here), that’s pretty much all of them, not a select few.

In the European Union, 18 out 27 countries have a minimum wage law. The rest typically set wages through collective bargaining agreements, making a minimum wage regulation largely unnecessary. I think on the whole, they might have heard of a minimum wage policy in Europe.

It’s actually much harder to find a country that doesn’t have some form of minimum wage regulation, than to find one that does. Again, Wikipedia to the rescue.


  1. It shows Malaysian business are only interested in share holders benefits

  2. It shows that many people in Malaysia are just not honest. When they talk to argue about how bad the Malaysian Government is, then they go on and on about low salaries and poor quality of life compares to Singapore.

    When it is time to affect the changes that hit their profits, they just go the complete opposite. Bottom line is we have many opportunistic business owners and employers who would like to continue to exploit the foreign workers for as long as possible. Nevermind that the country will lose in the long run....

  3. Implementing the minimum wage law might cause serious problems too. Employer got a reason to pay first time job seeker Rm900 instead of the fair market price and regardless of their qualification. Besides that, this pay will not reward hardworking employees for doing extra work. It benefits lazy employees as they don't have to work hard to get Rm900 salary.

  4. I like to think that just because everyone has a minimum wage mechanism, doesn't make it right or socially optimal.

    There are other better alternatives out there, but I think I sorta mentioned that in the other posting.

    Like to point out that there are some rich countries (besides the aforementioned EU countries) that do not have minimum wage, Singapore and Brunei for example. Hong Kong - the ultimate country in free market experimentation - didn't have a minimum wage until recently.

    I want to stress that we can't really prove that minimum wage - at RM800, RM900 - will improve society's wellbeing (especially with the data inadequacy here), neither is it a prerequisite for growth or a characteristic of a high income nation; plenty of poor countries in the Wikipedia sample.

    It really does feel like an additional unnecessary distortion to the markets, when all policymakers really have to do is just free up wage/labour data. This is especially when we do it in an environment where subsidies ALREADY distort/depress prices.

    My 2 cents.
    I promise not to pursue this argument anymore :)