Minimum Wage Reduce the Low-Skilled Foreign Workers in Malaysian Manufacturing Sector
Sheikh Ahmad Faiz Sheikh Ahmad Tajuddin1, Fauziah Abu Hasan2, Suriyani Muhamad3, Nor Fatimah Che Sulaiman4
1Sheikh Ahmad Faiz Bin Sheikh Ahmad Tajuddin, Faculty of Business, Economics & Social Development, Universiti Malaysia Terengganu, Terengganu, Malaysia.
2Fauziah Binti Abu Hasan, Faculty of Business, Economics & Social Development, Universiti Malaysia Terengganu, Terengganu, Malaysia.
3Suriyani Binti Muhamad, Faculty of Business, Economics & Social Development, Universiti Malaysia Terengganu, Terengganu, Malaysia.
4Nor Fatimah Binti Che Sulaiman, Faculty of Business, Economics & Social Development, Universiti Malaysia Terengganu, Terengganu, Malaysia.
Manuscript received on 25 November 2019 | Revised Manuscript received on 04 December 2019 | Manuscript Published on 10 December 2019 | PP: 680-684 | Volume-8 Issue-3S2 October 2019 | Retrieval Number: C12181083S219/2019©BEIESP | DOI: 10.35940/ijrte.C1218.1083S219
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: The paper emphasizes on the implementation of minimum wage in Malaysia and subsequent increases of the minimum wage to estimate the minimum wage’s effect on the low-skilled foreign workers. High dependency towards the foreign works has been one of the major reasons for the Government to introduce the minimum wage policy in 2012. The study used questionnaire survey and focused on the manufacturing firms in Peninsular Malaysia that are registered with the Federation of Malaysian Manufacturers. We have conducted a panel analysis study covering periods of 2008 to 2017 to analyze the effectiveness of the minimum wage policy in reducing the low-skilled foreign workers. The findings suggested that the employers reduced their low-skilled foreign workers to respond to the implementation and the increase in the minimum wage. The higher statutory wages have caused the firms to reduce their less productive workers. Based on the analysis, we suggest that the companies tend to retain and hire more skills and productive workers in order to cope with the increase in the labour cost. Not only reducing the inflow of foreign workers, the minimum wage policy would have a significant impact towards productivity. Forging ahead with the fourth industrial revolution, productive workers are the key instruments for the firms to remain competitive in the industry as well as to accelerate their productivity and profitability.
Keywords: Employment, Foreign Workers, Manufacturing, Minimum Wage.
Scope of the Article: Manufacturing Processes