Southeast Asian workers press for big minimum wage hikes

19 Aug 2017 Ferado

HANOI — Calls for major increases in minimum pay are spreading through Southeast Asia as workers grow more conscious of their rights amid economic expansion and turn up the pressure on their governments.

Malaysia and Myanmar are among the countries where labor is pushing for hikes, which would help spur consumption. But higher personnel costs could also drive foreign businesses away.

Pressing for more

The Malaysian Trades Union Congress, representing workers in mainstay industries, has lobbied for a 50% increase next year in the monthly minimum of 1,000 ringgit ($232), targeting businesses on the Malay Peninsula. The country has implemented hikes nearly every year at regular intervals since instituting a minimum wage in 2013.

Malaysia has seen gross domestic product per capita reach about $10,000 — just shy of being designated a developed economy. But workers on oil palm plantations and in factories are paid relatively little. Labor’s request is unlikely to be accepted as is. But with general elections coming up, possibly as soon as this year, Prime Minister Najib Razak’s government may look to woo workers.

Unions in Myanmar have also called for a 56% increase in minimum daily pay to 5,600 kyat ($4.14). The lifting of U.S. sanctions last year helped spur economic growth. But inflation has also marched ahead, with consumer prices climbing 7% in 2016. The government of State Counselor Aung San Suu Kyi, the de facto leader, greatly values domestic stability and so is not in a good position to ignore workers’ voices.

Wages have become a political issue in Cambodia as well. Prime Minister Hun Sen has declared that minimum monthly pay will rise to $160 from the current $153 by 2018. This would put the country close to “newly industrialized economy” status and to Thailand’s level of around $186. National elections will not come until 2018, but the opposition made significant gains in regional elections this June. The opposition has drawn support with promises of major wage hikes, and both camps now make dueling promises on pay.

A double-edged sword

Wages have risen 11-91% in the past four years for unskilled laborers at factories in national capitals across Southeast Asia, according to the Japan External Trade Organization. A government-imposed raise in minimum pay would inevitably lift actual wages.

Pay raises push up consumption and help cull labor-intensive industries that no longer suit the stage of economic development. But if raises divorced from the underlying fundamentals continue amid political instability, businesses become more likely to flee. Cambodia has suffered from companies including Ford Motor and a leading European sewn-products maker walking away from factories for such reasons as spiking labor costs.

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