High minimum wages with very low purchasing power will cause disparity between the rich and poor, says PM
By NG MIN SHEN / Pic By ISMAIL CHE RUS
Malaysia must strive to increase purchasing power instead of raising minimum wages, as the latter will not help in achieving equitability in the country, said Prime Minister (PM) Tun Dr Mahathir Mohamad.
Dr Mahathir said many countries with high minimum wages have a very low purchasing power, resulting in a disparity between the rich and poor and bringing little social justice to the people.
“This happens because attention is not paid to productivity. Attention is paid only to increases in wages and higher income,” he said at the Khazanah Megatrends Forum 2018 in Kuala Lumpur yesterday.
He said a country must also ensure that a raise in wages would not cause inflation.
Dr Mahathir said this could be achieved with the increase in productivity, ensuring production cost remains low and living expenses do not rise.
“It is the purchasing power of their wealth that is important — not just the amount of money they get. Higher income with higher cost of living does not benefit the wage earner very much.”
Dr Mahathir also stressed the need to narrow the gap between the rich and the poor as such discrepancy would lead to civil war and unrest.
“We have to do this in a way that the rich will continue to invest and create wealth and that wealth will be distributed to the other stakeholders and the workers.
“It is the duty of the government to ensure that the society enjoys all the amenities and wealth of the nation equitably,” the PM said, but adding that this does not mean everyone will receive the same amount of money.
He also said the different races should enjoy the same wealth equally.
Meanwhile, he said economic management is not as easy as it was before because the country is no longer “doing the simple business of producing goods and services”.
“Now money can be made in other ways. It is up to us to learn how to make use of money in a more efficient way,” he said.
He also called for new economic indicators as the country’s per capita income was inaccurate.
“We need to find other indicators of the wealth of nations. If we go only by per capita income, there is no equitability because the per capita income is due to the very high earnings of the top few, while the bottom have hardly any money,” Dr Mahathir said.
Meanwhile, he said the present government will employ more professionals to manage government institutions and government companies.
“We should have good governance and management in the business sector. If we do this, I’m quite sure we will be able to grow the country faster.”
He also reiterated that Malaysia will be “very friendly” towards the private sector and welcome foreign direct investments (FDIs).
“We will help them (the private sector) to make profits when they invest in this country, be they foreign or local.
“We allow, we accept and we encourage FDIs. We have done this before, we have grown. But now we have to revive it because we still feel FDIs definitely have a role to play in the development of Malaysia,” Mahathir said.
However, he said FDIs are defined as bringing capital and technology into the country, as well as setting up plants in Malaysia and employing locals.