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Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment

On 1st May 2022, the Malaysian government raised the minimum wage (MW) to RM1,500, with a 25% increase. Even though there seem to be some signs of economic recovery, the Malaysian economy has yet to crawl out of a downturn. MW has been one of the most debated and controversial topics in economic lit...

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Main Author: Seow, Richard
Format: Article
Language:English
Published: UUM Press 2023
Subjects:
HG Finance
Online Access:https://repo.uum.edu.my/id/eprint/30058/1/JES%2005%2001%202023%201-19.pdf
https://doi.org/10.32890/jes2023.5.1.1
https://repo.uum.edu.my/id/eprint/30058/
https://e-journal.uum.edu.my/index.php/jes/article/view/18390
https://doi.org/10.32890/jes2023.5.1.1
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spelling my.uum.repo.300582023-11-28T13:37:06Z https://repo.uum.edu.my/id/eprint/30058/ Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment Seow, Richard HG Finance On 1st May 2022, the Malaysian government raised the minimum wage (MW) to RM1,500, with a 25% increase. Even though there seem to be some signs of economic recovery, the Malaysian economy has yet to crawl out of a downturn. MW has been one of the most debated and controversial topics in economic literature due to mixed results on employment. While it may be too early for any empirical study on the impact of this recent hike, we are not completely clueless about what to expect. This paper aims to offer valuable insights into the potential implications of the new minimum wage policy (MWP) through a narrative literature review approach. Although no conclusive prediction can be made, the literature on developing countries with high MW increases seems to suggest that higher disemployment, reduced foreign worker dependency, formal sector (FS) migration to the informal sector (IS), and higher non-compliance are likely to be expected. This paper contributes to the understanding of MW in developing countries. Based on the channel of adjustment (CoA) model, alternate suggestions are offered to small and medium enterprises (SMEs) to better cope with the financial stress caused by MWP. UUM Press 2023 Article PeerReviewed application/pdf en cc4_by https://repo.uum.edu.my/id/eprint/30058/1/JES%2005%2001%202023%201-19.pdf Seow, Richard (2023) Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment. Journal of Economics and Sustainability (JES), 5 (1). pp. 1-19. ISSN 2637-1294 https://e-journal.uum.edu.my/index.php/jes/article/view/18390 https://doi.org/10.32890/jes2023.5.1.1 https://doi.org/10.32890/jes2023.5.1.1
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Seow, Richard
Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment
description On 1st May 2022, the Malaysian government raised the minimum wage (MW) to RM1,500, with a 25% increase. Even though there seem to be some signs of economic recovery, the Malaysian economy has yet to crawl out of a downturn. MW has been one of the most debated and controversial topics in economic literature due to mixed results on employment. While it may be too early for any empirical study on the impact of this recent hike, we are not completely clueless about what to expect. This paper aims to offer valuable insights into the potential implications of the new minimum wage policy (MWP) through a narrative literature review approach. Although no conclusive prediction can be made, the literature on developing countries with high MW increases seems to suggest that higher disemployment, reduced foreign worker dependency, formal sector (FS) migration to the informal sector (IS), and higher non-compliance are likely to be expected. This paper contributes to the understanding of MW in developing countries. Based on the channel of adjustment (CoA) model, alternate suggestions are offered to small and medium enterprises (SMEs) to better cope with the financial stress caused by MWP.
format Article
author Seow, Richard
author_facet Seow, Richard
author_sort Seow, Richard
title Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment
title_short Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment
title_full Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment
title_fullStr Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment
title_full_unstemmed Response To Minimum Wage Shock in Malaysia: SMEs’ Channel of Adjustment
title_sort response to minimum wage shock in malaysia: smes’ channel of adjustment
publisher UUM Press
publishDate 2023
url https://repo.uum.edu.my/id/eprint/30058/1/JES%2005%2001%202023%201-19.pdf
https://doi.org/10.32890/jes2023.5.1.1
https://repo.uum.edu.my/id/eprint/30058/
https://e-journal.uum.edu.my/index.php/jes/article/view/18390
https://doi.org/10.32890/jes2023.5.1.1
_version_ 1783881401025691648
score 13.211869

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