Minimum Wage on the Increase in Asia

| Jun 6, 2012 | BY WRAP

This article was written by Amanda Jean Wessell, the Communications Intern at WRAP.

Several countries in Asia are increasing the minimum wage standard in an attempt to improve the quality of life of their citizens. The jump to a higher minimum wage is likely to lead to more satisfied workers and increased production in places such as Tibet, but could also lead to increased inflation and higher market prices for consumers in other regions like Vietnam. While the outcome may differ by country, one thing that’s certain is that minimum wage is on the rise in Asia.

Malaysia is not increasing its minimum wage standards, but setting a national minimum wage for the first time in the country’s history. According to Reuters, setting the minimum wage standard is a part of a reform to take Malaysia from a middle-income economy to a developed nation. The country aims to implement the plan in stages to combat employers’ fears that a sharp increase could be a detrimental to Malaysia’s competitive advantage. In an article, The New York Times reports that Malaysia set the minimum wage at 900 rigit (or US$297) per month on Labor Day, or May 1, 2012.

In India, New Delhi’s leaders also look to set a higher standard by improving labor welfare and increasing the minimum wage of skilled, unskilled, and semi-skilled workers, according to an article in the Times of India. Unskilled workers’ minimum wage was increased from 6,656 to 7,020 rupees, semi-skilled worker’s wages rose from 7,358 to 7,748 rupees, and skilled workers will be increased from 8,112 to 8,528 rupees.

Tibet, an autonomous region, is also looking to improve the quality of life of its people by raising the minimum wage from 130 yuan to 400 yuan per month for urban workers, with a rural minimum wage doubling to 1,600 yuan a year. Not only has Tibet increased the minimum wage standard, but the government also distributed more than 112 million yuan in pensions and allowances to impoverished citizens. According to China Daily, the minimum wage increase and pensions have helped solved some of the monetary problems faced by citizens.

The opposite may be true for Vietnamese citizens, many of whom express concerns of inflation following the rise in wages. The minimum wage increase affected state agencies, the armed forces, and socio-political organizations, as well as state-owned one member limited companies according to The China Post. The minimum wage increase, put in place May 1, 2012, was the fourth increase in four years—adding 220,000 dong to the monthly minimum wage. Citizens welcomed the increase but worry that it will increase market prices.

Not only have Tibet and Malaysia advanced to higher minimum wage standards, but cities all over China have also begun to raise their minimum wage limits. Beijing increased its minimum wage 8.6 percent to 1260 yuan, and Shenzhen lifted its minimum wage 14 percent to 1500 yuan. In April, Tianjin will increase its wage 13 percent to 1310 yuan, according to The Wall Street Journal. Although wage increases could affect China’s competitive advantage, they will prevent labor strikes and unrest among workers who want a share of the country’s economic growth.

With wages on the rise, each country and region hopes to not only improve the quality of life of their people, but increase domestic spending. Citizens will have more money in their pockets to solve monetary problems, which means they will also have the ability to increase spending, generate new business and eventually increase manufacturing rates.

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