Workers’ Perception towards Minimum Wage Impacts on Labor Productivity in Malaysia

ABSTRACT: Wage and fringe benefits are the highest form of rewards for workers since they are the backboneto every organization. As such, the implementation of minimum wages in Malaysia aims to ensure the workersreceive ‘fair’ wage and avoid them from being exploited. This study examines the workers’ perceptionminimum wage effects on low skill workers in selected electrical and electronics firms in Malaysia. Prominenteffects of minimum wages could be detected through unemployment, poverty rate and workers’ quality of life indeveloped and developing countries. However, the workers’ opinion towards minimum wage effects on laborproductivity in Malaysian in particular are still least explored. Thus, minimum wage effects on labor’sproductivity have become important research topics. As such, this study discusses the effect of minimum wageson labor productivity of employees and their respected employers. Data was gathered from semi-structuredsurvey questionnaire with employees and interviews with employers in electrical and electronics firms inPenang and Kulim industrial zones. Triangulation method was used to verify the findings quantitatively usingexploratory data analysis (EDA) and qualitative results were analyzed manually. The findings suggest that thereare strong association between the income received by the employees with their productivity level. The higherwage received by an employee, the higher the productivity level of the worker. The findings have forwardedsome current views on the issue of minimum wage and hence, better wage policies should be facilitated in thefuture. Implementing strategic plans and negotiating with interested parties on wage issues will improve theeffects on minimum wage for all workers.

KEYWORDS: Labor Productivity, Low Skill, Malaysia, Minimum Wage