Minimum wage policy: Is there any impact on low skilled workers in electrical and electronics companies in malaysia?

Abstract

Wage are the greatest pushing factor for many workers to work and positively relates to employee life satisfaction. Meanwhile, fringe benefits improve the skills and knowledge of workers and enhance the organization’s reputation. Minimum wage policies around the world uphold the principle to provide a basic living wage for their workers. Nevertheless, the impact of national minimum wage policy on Malaysian employees, in particular, was the least explored since enacted into law in 2012. This study examines the minimum-wage impact on low-level skilled workers in the electrical and electronics industry in Malaysia. Minimum wage can have an effect on labor productivity and fringe benefits, particularly training, allowances, and insurance, have become important research topics. As such, this research discusses the effect of minimum wages on labor productivity and fringe benefits of employees. A semi-structured survey questionnaire was distributed to 600 employees in electrical and electronics firms in Penang and Kulim Industrial Zones. Data from 432 questionnaires were quantitatively analyzed using Exploratory Data Analysis (EDA). The findings suggest that employers should make some adjustments in administering the wage scale due to the implementation of minimum wage national policy that has impacted firms’ costs and incomes. The results also found that the minimum wage affects labor productivity and wage differences among workers. Meanwhile, the minimum wage does not adversely affect the adjustments to the fringe benefits, except for the provision of training. This study recommends more strategic plans and negotiations between stakeholders on wage and fringe benefits that would warrant continuous positive effects for both workers and employers.