The Challenges of Implement a Minimum Wages Policy

Creating a so called “culture of compliance” among employers (Skidmore 1999: 435) is a low-cost strategy for facilitating the self-enforcement of minimum wage. This strategy implies the construction of persuasive arguments in favor of the minimum wage and the appeal to common values and beliefs such as, for instance, the principle of “fair pay – fair play”.

Here, two main strategies for building commitment among employers can be identified. First, persuasive processes at the interpersonal level may take place. A strategy of interpersonal persuasion was used, for example, in the interaction between labor inspectors and managers in British and US-American coal mines from the Sixties to the Eighties, when “open and frank discussions” as well as persuasion through the inspectors contributed significantly to achieve higher level of compliance with safety provisions (cf. Braithwaite 1985).

Second, persuasion about the minimum wage may take place at a societal level through a supportive public discourse. Employers who do not comply need to be presented to the wider society as “cheaters” (Ayres & Braithwaite 1992: 92; Skidmore 1999: 436). Indeed, employers paying under the minimum wage are competing in an unfair way with others who respect the minimum wage law. Furthermore, the profits deriving from labor cost cutting are made at the public expense, because underpaid workers may then need state subsidies.

Minimum Wage Setting and Common Rule Interpretation

The management approach to compliance highlights the importance of regulatory frameworks which have been discussed and understood by the actors involved. This is a way to avoid non-compliance due to rule ambiguity. Moreover, as the actors have previously agreed upon them, ...

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...low into the country. More money in the hands of private consumers should boost private consumption.

According to Bank Negara Malaysia (BNM), the minimum wages policy “is expected to have a positive impact on the Malaysian economy”. BNM anticipates that the impact on business costs will be minimal as it will be mitigated by improvements in productivity. “Given that low-wages households tend to have a higher marginal propensity to consume, the increase in the incomes of the affected employees can be expected to result in higher consumer spending and economic activity.”

Nonetheless, the government recognizes that Malaysian employers may face challenges as they adjust to the new wages policy. Despite this, the policy represents a step in the right direction for Malaysia as it joins the ranks of some 150 countries with minimum wages policies already in place.