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Post-8 March, one of the many glimpses of light at the end of the tunnel was the idea of letting markets decide resource allocation and pricing. That glimpse of light seemed to be extinguished.

PUTRAJAYA: The days of low wages for workers in the electronics and textile sectors may soon be over.

The Human Resources Ministry has given a directive for a wage council to be set up to look into the salaries of workers in both these sectors after receiving complaints that they “consistently received low wages.”

Why do companies pay low wages? They either do not think that higher wages in Malaysia is justified (and therefore would leave Malaysia if ever such a minimum wage is imposed) or they can’t afford higher wages (and therefore, would simply move out or shut down).

Yeah, there is a problem with high wages, especially considering fresh graduates in Singapore (divided by a 1 km causeway to Malaysia’s second-largest city) earn some three times more than Malaysian graduates. But why do they? Workforces in higher-wage countries are better educated, better qualified. They have better infrastructure. A better regulatory and tax environment. High-wage countries don’t suffocate businesses with miles of red tape, tonnes of regulation and price controls.

Yeah, there’s a brain drain. But to achieve wage parity with other countries, the soon-to-be priced-controlled wages will necessarily mean more unemployment or underemployment, and more brain drain. If I want to work in the electronics sector and thanks to the minimum wage, I can’t get a job in Malaysia, I’ll just cross the causeway, apply for a Temporary Work Permit and work there.

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