There’s a mathematical formula to calculate minimum wage in Malaysia..
According to the International Labor Organization (ILO), this is the formula that we use to calculate the minimum wage:
Equation based on ILO.
The FIRST half of that equation (the one within the long rounded brackets) is to calculate the floor wage, which is a base minimum wage that doesn’t take into account external factors like unemployment and inflation. Instead, it averages two things:
- How much a worker realistically needs each month, by dividing the Poverty Line Index (PLI, the amount of money you need just to feed yourself plus other things) by the average number of people bringing in the nasi in a household.
- The median pay of the bottom half of the wage earners, but for this article we’ll be using the bottom 40 percent’s (B40) median pay.
The SECOND half adjusts the floor wage to recent conditions by taking into consideration things like changes in the productivity index (P, a measure of how productive workers are per hour of work), the Consumer Price Index (CPI, a measure of how much the price for goods and services have changed), and the Unemployment Rate (UE). And the tiny ‘i’s at the bottom of some things? Well, it used to represent region, as the minimum wage for the Peninsula, Sabah and Labuan, and Sarawak was calculated separately.
So by plugging in data we’ve gathered for 2014, we came up with this…
Links for the data: Poverty Line Index, Median wage for B40, Labour Productivity, Consumer Price Index, and Unemployment Rate change.
Read more here...
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