How to pay Zahra better?

By Liew Chin Tong

The #sayaZahra video campaign by Majlis Tindakan Ekonomi Melayu resonates with so many Malaysians. The six-minute video is very powerful. It is an indictment of the failure of public policies, leaving a generation who have graduated with paper certificate but living like beggars.

Zahra spoke about many facets of the lives of ordinary Malaysians such as income, education, housing, transport, social safety net (when faced with accidents or illness). In this piece, I would just like to focus on the question of “how to pay Zahra better”.

Twenty years ago, freshly graduated lawyers in Kuala Lumpur were paid around RM2,000 a month, considered quite a satisfactory pay. Today, freshly graduated lawyers get slightly more than RM2,000 a month. Taking inflation into account, there has been a massive decline of income level for the young lawyers.

Zahra aspires to be a qualified lawyer, and her pay now is probably less than the freshly graduated lawyers. So, how do we pay her better? How to reverse the decline of income level for young lawyers?

To pay Zahra better, there is an urgent need for restructuring the Malaysian economy dramatically.

Regulating minimum wage could be one of the many answers; however, minimum wage can only work well at the bottom level. It is almost impossible for government to determine pay scale at other levels in a rigid way. Yet, the government has in its policy toolkit various ways to influence the outcome.

The only sustainable way to pay Zahra better is to ensure that there is a virtuous cycle of higher pay, higher skills and higher productivity. That can only happen when Malaysia no longer depends on unskilled foreign labour.

Garbage collectors

To pay Zahra and her peers more the Malaysian economy would have to start with paying garbage collectors better. Only when those at the bottom are paid much better, then a rising tide would occur.

Say if we pay a garbage collector RM2,000 per month, the Malaysian society would pay freshly graduated lawyers RM4,000 per month (probably worth the same as RM2,000 in 1995).
If garbage collectors are paid RM2,000, everyone else’s income will go up, if not all freshly graduated lawyers would choose to become garbage collectors instead.

You must be thinking that I am joking. How could one fathom the possibility of a garbage collector being paid RM2,000 per month in the current job market. But it is possible if we re-organise our economy.

Currently, garbage collection and urban cleansing are lucrative contracts often given to crony contractors by local authorities or solid waste management agencies.

Usually the cronies would take a cut and hand the real job to a subcontractor. Often there is more than one middleman/rent-seeker that does nothing except to profit from the contract or license he obtained through political connections.

By the time it reaches the real subcontractor it may not be lucrative anymore. The subcontractor, ever worries about cutting cost, would hire unskilled foreign workers to carry out such 3D jobs (dangerous, dirty, and demeaning). They are paid between RM600 and RM900 per month.

A typical garbage truck would hire a lowly paid Malaysian driver and four to five Bangladeshi workers. But in many advanced countries, garbage trucks are often driven by one person with everything else being automated. In an economy that depends on automation, machines, skills and technologies, the driver who drives the big automated garbage truck is paid for his role as a competent driver and operator of the machine.

Can we pay the all-rounder one-man show garbage collector RM2,000 a month? Is it possible? The answer is a firm ‘yes’. The key is to remove the crony-contractor who profit from his ‘cable’ to get contract and the abundance supply of unskilled foreign labour.

Unskilled foreign labour

Not just in the case of garbage collection but in almost every other sector, Malaysia, as an economy, doesn’t value skills, is not developing new technology, and is not interested in innovation.

Industries are not climbing the value ladder. Many are contented with profiting from the unskilled foreign labour as it is the easier way out.
Nevertheless, blaming industries alone is not solving the problem. Industries are not getting financial support to expand on machine tools and automation. There is very little support for research and development (R&D).

Knowing that they would not be able to move up the value ladder, employers are contented with hiring huge number of unskilled foreign labour who work like machine. Many employers then lament that compared to foreign workers, Malaysian workers are lazy and often burdened by family commitments.
The crux of the problem lies in the deliberate policy to bring in more unskilled foreign labour.

For every foreign labour brought into this country, some cronies would make a cut somewhere. Human Resources Minister Richard Riot claimed that Malaysia has more than 6 million foreign workers, of whom about 2.5 million are documented. Home Minister Zahid Hamidi wants to bring in a further 1.5 million Bangladeshi in the next three years.

When even service sector jobs like those at hotels and 7-Eleven are taken by unskilled foreign labour, Malaysian at the bottom run out of jobs with decent pay. Some settle for a lower pay. Some live idly. Some commit crimes.

Cronies

For Zahra and her peers who have university degrees, as the entire economy is not in pursuit of higher skills and values, they are stuck. Employers just need “good workers” who function like machines. With or without a degree they are not valued. Of course, in such a vicious cycle, our education system also did not prepare our students.

Some of the skilled workforce who could not stand such conditions leave and work elsewhere. At least 1.5 million Malaysians, mostly highly qualified and skilled, work overseas.

How to pay Zahra better? Get rid of the cronies who profit from importing unskilled foreign labour, reduce the presence of unskilled foreign labour in our economy (especially in the services sector) and make available resources for a massive push for skilled and technological upgrades should be high on our agenda.

When I was 20 in 1997, the Asian Financial crisis hit Malaysia. Since then, the Malaysian economy and politics have been muddling through without major reforms and transformations.

I was very touched and emotional when I watched Zahra’s speech. We have wasted my generation. Let’s not waste hers.

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