Post on 30-May-2015
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Presented by Group 3 : Ashanee Mad-Ahin Phimpaporn Waeowanjit Naz Abdul Kareemarif Arif Rininta Nurrachmi
The World Bank Report
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Article Summary
Analysis of the Article
Survey of Related Article
Conclusion www.rininta-nurrachmi.blogspot.com
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Cons Pros
It will reduce poverty or
inequality
Promoting productivity
growth
addressing efficiency
issues in labor markets
Low wage because low
productivity
increase the salaries does
not improve equity in the
population
It has negative impact eg.
Sabah (mid-low levels of
productivity and high
costs of living)
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Labor Market in Malaysia is not fully competitive
There is existence of Monopsony in Malaysia Labor Market
Malaysia is foreign worker dependence
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The Possible effect of Min
Wage
Employment
Increase Informal
labor
Effect the adult
workers Effects on low-skilled
workers especially
women
Investment
Effect on FDI
Migration
Decline in the
demand for
migrant workers.
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Institutional Set Up
Analyze from 5 countries (Hong Kong,
Taiwan, Thailand, Chilie and S Korea)
Establishing the NMWC (New
Minimum Wage Council)
Same treatment between foreign
workers and Malaysian workers
Economic justification is
use for considering a
regional adjustment.
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Input for policymaker
Comprehensive Information
Strength
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3 Weaknesses
There’s no distinction
for economic sector
From western Perspective
and Developed Countries
The countries studied did not
Malaysia
(Thailand, Hong Kong, Chile,
Taiwan, S Korea)
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Report from World Bank for Malaysian
Government
Imply that the impact of Minimum Wage (MW)
will depend on the structure of the country’s
labor market.
Conclude that the impact of implementing
MW on most sectors in the country would be
minimal.
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“Does the Minimum Wage Affect Employment? Evidence from the
Manufacturing Sector in Indonesia” by Ximena Del Carpio, Ha
Nguyen,Liang Choon Wang (2012)
This paper investigates the impact of MW in Indonesia.
Using firm panel data from 1993 to 2006 (Source : Indonesia
Industry Survey)
The results show that MW has negative employment effects on
small firm but not large firm
The negative effect of MW is mainly concentrated more for less
skill workers than high skill workers.
The vulnerability is more accentuated for women than men
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There are similar effect of MW on
Indonesia & Malaysia
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Minimum wage
resemble essential
wage to fulfill Daruriyat
without overburdening
himself.
An Islamic Framework for Employer-Employee Relationships
by Akhtar (1992)
“Using minimum wage law as intervention in the labor
market for protection the interest of worker when market
imperfection exist. “
As well as promotion Masalih al-Ibad.
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An Islamic Framework for Employer-Employee Relationships by
Akhtar (1992)
Islamic state should determine minimum wage through a process of
tripartite negotiation where employers and the state are equally
represented and rules are laid down to ensure that workers receive
their due.
In line with the statement mentioned by the report World Bank
The World Bank recommend to have tripartite agreement as
reviewed from the studied countries (except Chile) as guidelines
for how Malaysia should operate.
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Conclusion Recommendation
Increase Labor
productivity
Implement the policy
together with Islamic tools
Pros and Cons
Min Wage does not
guarantee
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