ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

Southeast Asian workers press for big minimum wage hikes

Malaysia, Myanmar unions seek raises of 50% or more as economies heat up

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.

So minimum wage hikes in Indonesia were revised in 2016 to be based on inflation and economic growth rates, prompted by hindsight on a 44% increase in 2013. Vietnam, too, kept its minimum pay increase in 2017 to an all-time low of 7.3% in order to repress overgrown wages. Labor groups have pushed for a 13% raise in 2018, but the government is expected to keep it to the 6% range.

Workers in Southeast Asia are willing to change jobs to seek higher pay and better conditions, a recent survey by Dutch human resources company Randstad shows. In particular, 83% of employees in Singapore said the concept of permanent employment is gone and sees job changes as a given. Malaysia also showed higher rates than Western countries of people finding or seeking new jobs.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends May 26th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media