A Study on Impact of Minimum Wage on Sustainability and Competitiveness of the Timber Industry

Abstract

In recent years, the minimum wage has become an increasingly popular for reducing inequality in many emerging markets. The aim of the minimum wage is to allow low income workers to maintain a decent standard of living without unduly limiting the flexibility of employers to allow Malaysia to remain competitive at the global level.  In setting the minimum wage, the government took into account social and economic considerations: cost of living, productivity, competitiveness and employment. The timber industry in Malaysia is one of long-standing prominence, garnering much attention as one of the economy’s core components of growth. Malaysia is among the world’s largest exporter of tropical logs, plywood, sawn-timber and furniture to international markets. This survey aimed to reveal the impact of minimum wage on sustainability and competitiveness of the timber industry. This paper will emphasize on the comparison between wood and wood based product sector firms and furniture sector firms in the timber industry. The targeted respondents are the owners or the managers who have knowledge on the financial information and the operation details of the company. Overall, SMEs in the furniture sector seem to be more ready towards the implementation of the minimum wage policy in comparison to their counterparts in wood and wood-based products sector. Their operational performance ratings are generally higher for majority of the different performance aspects.