Definition of 'Private Sector'
- The part of the economy that is not stated controlled, and is run by individuals and companies for profit
- The private sector encompasses all for profit businesses that are not owned or operated by the government
- Companies and corporation that are government run are part of what is known as the public sector, while charities and other non-profit organizations are part of the voluntary sector
Definition of minimum wages
- Minimum wages means basic wages
- Under section 2 of the Employment Act 1955, the term "wages" means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but not include :
i) the value of any house accommodation
ii) employer's contribution to any retirement scheme
iii) any travelling allowance or the value of any travelling concession
iv) any gratuity payable on discharge or retirement
v) any annual bonus or any part of any annual bones
The Impacts of Minimum Wages on Private Sector
1 - Advantages of Minimum Salary
- Reduce poverty - These workers will have an increase in income and this will reduce poverty
- Increase productivity - Higher wages can increase people incentives to work harder, thus it will increase their productivity
- Increased investment - Will be an incentives to firm to invest
- Competitiveness in public sector - People will compete with each other to get permanent and high salary
2 - Disadvantages of Minimum Salary
- Unemployment - If labour markets are competitive a minimum wages could cause unemployment because firms will demand less labour, and higher wages may encourage more workers to supply their labour
- Cost push inflation - Firms face an increase in costs which are likely to be passed on to consumers
- Black market - A number of people working on the black market will increase so firms can avoid paying the legal minimum
- Poorest do not get benefit - They have to rely on benefits are therefore not affected by minimum wages
.:: In conclusion, the minimum wage would not remain static, but it would be reviewed from time to time based on the country's abilities, productivities and competitiveness [Datuk Seri Najib]
Sources : 1 , 2 , 3 , 4
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