Charles Santiago

Posted by : Unknown | Rabu, 22 Jun 2011 | Published in

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Charles Santiago

Decent Living Wages Compromised with NWCC Bill

Posted: 22 Jun 2011 07:02 PM PDT

The National Wages Consultative Council (NWCC) Bill 2011replaces the Wages Council Act 1947.


a)      Minimum Wages can be implemented without the NWCC

The proposed Bill establishes a Wages Consultative Council in order to conduct studies and make recommendations to the government on minimum wages. The proposed body will be consultative in nature and its decisions are not binding on the government.

All recommendations of the Council must be routed through the Minister who is empowered to make the final decision. Also, the members of the council are appointed by the Minister.

The Minister has absolute power and authority in making decisions on minimum wages. The Minister – appoints council members, makes all final decisions, and controls the process – in the determination of minimum wages.

Thus, the Minister can determine minimum wages with the help of a technical committee in the Ministry. Thus the setting-up of a National Wages Consultative Council is redundant; a waste of public funds and it introduces another bureaucratic layer in wage determination.

b)     Definition of Minimum Wages – Missing!

The proposed Bill does not define a minimum wage framework in order to guide the deliberations and decisions of the Council.

The Section 2 of the Employment Act (1955) stpulates wages in the following way:

“wages” means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include –

  • (a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;
  • (b) any contribution paid by the employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the benefit or welfare of the employee;
  • (c) any travelling allowance or the value of any travelling concession;

But a similar framework for minimum wages is not stipulated.

The International LabourOrganisation (ILO) provides a framework in the determination of minimum wages. Article 3 of the ILO Convention 131 on Minimum Wage(1970)suggests that determining the level of minimum wages shouldinclude:

(a) the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits, and the relative living standards of other social groups;

(b) economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.

In line with this framework, ASEAN nations such as Indonesia and Thailand and South Korea have developed a minimum wage framework which includes three factors: food, non-food and savings (percentage of wages).

£  Indonesia- minimum wages laws stipulates "The establishment of minimum wages as mentioned under subsection (1) shall be directed towards meeting the need for decent living"(Act No. 13 year 2003).

£  South Korea  -In fixing the minimum wage, the Minister of Labor and the MWC should take into account the following factors: a) cost-of-living; b) wages of comparable workers; c) labor productivity etc

Again, such a minimum wage definition is not stipulated in the Bill. It is essential to have such a definition because minimum wages should be a wage that workers can live on and reproduce their families. It should not be a wage below the poverty line, as experienced by security guards in the country. Without a definition any amount can be a minimum wage.  We want to prevent such abuse of the minimum wage by getting an acceptable definition of a minimum wage that the Council can apply.

c)      The Council must be Autonomous and Independent

The proposed Bill suggests that members of the Council are to be appointed by the Minister and its decisions not binding.  We put forward an alternative approach to ensure that the Council is autonomous, independent and a decision making process that will serve the best interests of all stakeholders.

The Council must therefore:

  • Operate as a tripartite body with an independent third party mediating between employers and workers

We propose a tripartite framework, based on international best practices. It includes:

a)      Employer and employee representatives will be elected by employer organisations and labour unions;

b)      Independents must fulfill a set of specified, appropriate criteria for qualification and disqualification:

    • Knowledge of labour markets or labour law, experience in analysis of complex national issues
      • These criteria qualify, among others, academicians, industrial relations lawyers, retired judges and chairs of the Industrial Court
    • Vested interest, persons restricted in making independent judgment
      • These criteria disqualify, among others, government officials, retired civil servants with financial interests in companies

c)      Candidates for independent Council members will be proposed by workers, employers and government, with workers and employers reserving the right to veto up to one-third of the total number of nominations.

d)     This leaves in the end an independent group that is acceptable to both the employers and employees to help to bring a minimum wage figure that is acceptable to all.

e)      Government representatives are appointed to the council to contribute information and guidance on policy, but will not vote in the Council's deliberations

f)       The Council's recommendations must secure two-thirds of the voting Council members' support before being forwarded to the government

g)      The government may return the recommendation to the Council for re-deliberation. However, the subsequent decision of the Council, by two-thirds majority vote, will automatically become the legally binding decent living wage level.

Charles Santiago

Member of Parliament, Klang.




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