In Malaysia, wage is determined largely through market forces. In situations where there are unions, the salary will be determined through Collective Agreement (CA). However, salary determination through CA method is less common since unionized sectors only represent less than 10% of the total workforce in Malaysia.
I believe there should be a minimum wage law in Malaysia to protect the basic welfare of workers especially the lower income workers in the private sectors. In the public sector, the salary structure for the lower income group is much better compared to their counterparts in the private sector. In addition, workers in the public sector have better job security.
The strongest opponents of minimum wage would be the employers. Their argument is that increasing wage will increase cost of operation and the company may end up going bust. But cost management is more than just keeping labour cost down. There is a lot of other factors in play that determine the profitability of a company.
Malaysia Airlines (MAS), for example, has successfully turned around a business that was losing money into a profitable enterprise without cutting workers' pay. In fact, employees' salary (for lower income group) was raised. Idris Jala, Managing Director of MAS, said in an interview with the Star,
Recently, we increased the salaries of all MAS staff earning below RM1,000 (per month). Now, there is no MAS staff who earns below RM1,000. This may increase cost but we need to do the right thing, which is to help our staff make a decent living and support their families.
Companies that are making profits through cheap labours should restudy their business models. Reducing labour cost is not the only way to be competitive. Malaysian enterprises should figure out how to change their businesses into entities that produce higher value added products and services where the profit margin is higher and the dependency on unskilled labour is lower.