Disadvantages Of Minimum Wage

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Minimum wage is the lowest level of salary permitted which an employee must receive for their performing labour. The wage in each country has the force of law and which is coercible under threat of disciplinary or other appropriate penalty. It can also define as a wage fixed by contract or law as the least amount that should be paid to their workers. Australia and New Zealand were the first countries to use minimum wage system. The purpose that the countries practice this system was to raise the incomes of low-skilled employee. In Malaysia, Minimum wage initially has been set at RM900/month and RM800/month for Sabah, Sarawak, and Labuan that need to entail by the employer. This was implemented on 1st January 2013. For example, in 2016 the…show more content…
Minimum wage is a vital element to stimulate economic growth in each country. This system can ensure the stability of economy because unemployment rates and taxes will also increase. Minimum wage system comes to a lot of advantage and disadvantage for us. Increasing wage can make an employee has a high-quality lifestyle and ensure employees have a sufficient salaries for their daily expenses. Moreover, this system also can ensure safety in each country and reduce race and gender inequality. People will be given a reasonable wages no matter who you are. However, the disadvantages of increasing the minimum wage are increasing the cost of production and raising the unemployment rate. After increasing the wages of employees, the employers will charge a higher price of the goods and services which are provided by them to ensure their corporate profit. This is a circulation between wages and the profits. For the low-skilled labour, too high minimum wage will lead to increase the unemployment. It is because the employers always demand a skilful and highly educated labour when they pay a high salary for an employee. People with the lowest skill cannot justify the higher wage. Therefore, a small change in the wages for low-skilled labour tends to have a large effect. Minimum wage system must be practiced to protect and ensure the welfare of employees or labours. Increasing minimum wage has some implications. The implementation of minimum wage system will improve employee lifestyle choices, increase incentive, decrease criminal rate in each country and boost labours productivity. Minimum wage system can be a positive motivation to each country to be an advanced

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