Challenges and Implications of Implementing and Enforcing Minimum Wage Orders in Malaysia and Impacts towards Employee Motivation

Irmohizam Ibrahim, Norhasni Zainal Abiddin


With an emphasis on the context of human resource management and employee motivation, this article examines the implementation and effects of minimum wage policies in Malaysia. This review of the literature looks at several research that look into the connections between minimum wage laws, employment, income disparity, and worker motivation. The results imply that, depending on variables including labor market conditions and sector-specific dynamics, minimum wage rules may have both favorable and unfavorable effects on employment. Furthermore, the impact on employee motivation is managed and the function of human resource management in guaranteeing adherence to minimum wage laws is examined. In order to motivate workers and improve organizational performance, the article emphasizes the significance of fair and competitive salaries. In order to fully comprehend the effects of minimum wage laws, it also highlights the necessity of efficient enforcement techniques as well as the inclusion of other elements like labor market institutions and collective bargaining. The study ends by urging more investigation to properly understand the intricate connection, specific to Malaysia, between minimum salaries, employee motivation, and organizational outcomes. Overall, this article sheds light on the significance of sustainable salaries and efficient HRM techniques in fostering employee engagement and business success within the framework of Malaysia's minimum wage laws.

Keywords: human resource management, wage, motivation, employee, salary, incentive


1. Introduction

There has been interest in the state of affairs regarding the enforcement and implementation of minimum wage orders in Malaysia. The Minimum Pay Order 2012 was gazette on July 16, 2012, and it imposed minimum wage rates on firms with more than five workers as of January 1, 2013, and on employers with five or less workers as of July 1, 2013. (Ibrahim and Said, 2015). It is noteworthy, therefore, that companies offering professional services that fall under the Malaysian Standard Classification of Occupation (MASCO) were left out of this arrangement. In order to guarantee that minimum wage rules are followed, enforcement tactics are essential. The task of selecting an effective enforcement strategy to establish and enforce the minimum wage is one that the government must tackle. Importantly, though, this directive did not apply to businesses that provided professional services as defined by the MASCO. The use of enforcement tactics is essential to guaranteeing that minimum wage regulations are followed. In order to successfully implement and enforce minimum wage legislation, the government must decide on an appropriate enforcement strategy (Basu et al., 2009). The success of minimum wage laws as a whole may depend on how well they are enforced. Research has indicated that minimum wages have the ability to reduce measured pay inequality by compressing salaries among high and low-paid workers (Bell, 1997). Further investigation is necessary to determine the precise effect of minimum wage regulations on wage inequality in Malaysia. It is important to remember that minimum wage laws may have different economic effects in underdeveloped nations than in industrialized ones. Because more workers are impacted by minimum wage in developing nations like Malaysia, it can have a more widespread effect (Lemos, 2009). More research would be necessary to fully comprehend the implications of minimum wage laws in the context of Malaysia's economy. As a result, Malaysia has continued to enact and enforce minimum wage orders. Minimum pay rates were established for several categories of employers by the Minimum Wage Order of 2012. When assessing the current state of affairs, it is crucial to take into account the efficiency of enforcement tactics as well as the influence minimum wage regulations have on income inequality. To completely comprehend the particular consequences of minimum wage laws in Malaysia, more research is required.

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Copyright (c) 2023 Irmohizam Ibrahim, Norhasni Zainal Abiddin

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International Journal of Human Resource Studies  ISSN 2162-3058


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