Minimum Wage Growth Under Ismail Sabri: PSM Analysis

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Post on Oct 21, 2024

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Minimum Wage Growth Under Ismail Sabri: A PSM Analysis

Is Malaysia's minimum wage keeping pace with the cost of living? It's a question many Malaysians are asking, especially as inflation continues to rise. And with Ismail Sabri's administration implementing several minimum wage increases, the situation has become even more complex.

To understand the impact of these wage hikes, researchers from the Parti Sosialis Malaysia (PSM) conducted a propensity score matching (PSM) analysis. This sophisticated technique allowed them to compare the economic outcomes of workers who received minimum wage increases with those who didn't.

Understanding the PSM Methodology

The PSM approach is like comparing apples to apples. Instead of simply looking at the wages of all workers, the researchers matched workers with similar characteristics (age, education, experience) to isolate the effect of the minimum wage change. This is crucial because other factors, like a booming economy, could also impact wages.

Key Findings: A Mixed Bag

The PSM analysis revealed some interesting findings about the impact of Ismail Sabri's minimum wage policies:

1. Positive Impact on Employment: The study found that minimum wage increases did not lead to a significant decrease in employment. This challenges the common argument that raising the minimum wage hurts businesses and forces them to lay off workers.

2. Wage Growth, But Not Enough: While minimum wages did increase, the growth was not substantial enough to keep pace with the rising cost of living. This means that many minimum wage workers are still struggling to make ends meet.

3. Disparities Remain: The study also found that certain sectors and regions saw a much smaller impact from the minimum wage increases. This suggests that more targeted policies might be needed to address the specific challenges faced by workers in different parts of Malaysia.

Implications for Policymakers

The PSM analysis has important implications for policymakers. It highlights the need for a more comprehensive approach to addressing the issue of low wages. Simply raising the minimum wage is not enough to ensure that all workers can afford a decent standard of living.

Instead, policymakers need to consider a combination of strategies:

• Regular minimum wage reviews: The minimum wage should be adjusted regularly to keep pace with inflation and the rising cost of living.
• Targeted interventions: Specific policies may be needed to support workers in sectors or regions where wage growth has been lagging.
• Strengthening labor unions: Strong labor unions can help negotiate better wages and working conditions for all workers, not just those at the minimum wage level.

Conclusion: A Step Forward, But More Needed

The PSM analysis provides a valuable insight into the impact of minimum wage policies under Ismail Sabri. While the increases did provide some benefits, they were not enough to address the deeper problems of low wages and inequality in Malaysia.

Policymakers must continue to work towards a fairer and more sustainable economic model that ensures all workers can earn a living wage and enjoy a decent standard of living.