Minimum Wage Advantages And Disadvantages

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

Even though it brings advantages to us, it also has disadvantages.

First and foremost, under the circumstances of increasing minimum wages, it will promote the workers’ labour skills. At the same time, it improves the workers’ labour and living condition. The company not only can share innovation development bonus, but also push forward manpower capital and upgrade industrial structure. Nonetheless, in the 19th century, a researcher has discovered that increasing minimum wages can efficiently encourage workers to boost their labour skill, quality of work and then labour productivity will be promoted.

While the company has high production efficiency, at the same time, will increase the enhancement of competitiveness between each firm. Despite it increases the cost of firm; it will not diminish the competitiveness among the firms. When the fierce competition occurred between the firms, they will provide many types of products which let people have more choice to consume. Besides, the labourers will increase loyalty to the firm which they work. Under these conditions, labour productivity can be promoted

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.