KUALA LUMPUR: Businesses that cannot afford to pay a living wage do not effectively have a sustainable model and will need to prepare to deal with future shocks from economic, climate, or natural crises.
ACCA Asia-Pacific senior policy consultant Sharath Martin said businesses have to recognise that paying wages that workers need in order to have a decent standard of living is a matter of human rights.
“Paying minimum wages just isn’t good enough, especially when such wage levels are very low. We often assume that cost increases from paying additional wages may adversely hit small and medium enterprises.
“However, today, such businesses may have to deal with high staff attrition, rehiring and retraining costs, and loss of productivity, which affect their bottom line.
“To overcome these barriers, companies can focus on the benefits of paying a living wage, such as increased employee motivation and productivity, reduced turnover and enhanced brand reputation.
“Businesses and governments need to appreciate that living wages act as a socio-economic multiplier and will further boost the government’s building of the Ekonomi Madani,” he told SunBiz.
Sharath was echoing a recent survey conducted by ACCA which showed that while 88% of accountants globally acknowledge the importance of living wages, only 56% see it as their responsibility.
The data in Malaysia paints a similar picture.
Despite recognising the need for a living wage to achieve sustainability goals, only 33% of respondents believe it is their responsibility to ensure that even their Tier 1 suppliers adhere to this standard.
Sharath said companies should adopt a phased approach to implementing living wages, balancing the short-term costs with the long-term socioeconomic and financial benefits.
He said companies should implement a transition plan to pay living wages to all employees, including contract staff, address Tier 1 suppliers and expand gradually across the supply chain.
“They should also consider that the costs of turnover, retraining, and low productivity may outweigh the initial investment in paying higher wages. Communicating the long-term benefits – such as improved reputation, enhanced talent attraction, and alignment with government policies – can also make the case to stakeholders.”
When asked about the government’s role in implementing living wages, Sharath said policymakers and governments should understand that low wages put workers at greater risk of being forced to work, even if they are unwell, or having to work in conditions that compromise their health and safety.
“Low wages may also lead to children being forced to work to supplement the household income. It passes the burden to the government by having subsidy programmes, which then place additional stress on government finances and national debt levels.
“Consistent with the government’s Ekonomi Madani philosophy and framework, living wages, on the other hand, have the potential to serve as a significant socioeconomic multiplier that benefits workers, employers, the economy and the government. These benefits include reducing inequality and improving social stability, reducing government subsidies to low-income households, increasing consumption and gross domestic product and reducing the incentives towards bribery and corruption,” Sharath said.
Source: The Sun Daily
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