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Minimum Wage Levels Across ASEAN

By Dezan Shira & Associates
Posted: 30th April 2013 09:10
In an effort to combat inflation and prevent any outbreaks of labor unrest, ASEAN countries have increasingly been following China’s strategy of pushing for higher minimum wage levels and enacting new labor laws which greater protect workers’ rights. Many countries also see minimum wage increases as an opportunistic method of raising the productivity of their labor force in preparation for the opening of the ASEAN Economic Community in 2015.
Malaysia implemented the country’s first-ever minimum wage standards on January 1, 2013. Minimum wages are set at MYR 900 (US$296) per month in peninsular Malaysia, and MYR 800 (US$263) per month in the states of Sabah, Sarawak, and Labuan.
Prime Minister Naji Razak has stated that these standards will be renewed every two years, and the move has been stressed by Minister Idris Jala as part of the government’s strategy to evolve the country into a high-income nation by 2020.
After the initial introduction of these new wage levels led to protests and disturbances, small and medium-sized enterprises (SMEs) have been given until the end of 2013 to implement the legislation. They are, however, no longer permitted to make deductions from workers’ wages for levies, costs of accommodation and other allowances. Employers from other sectors may apply to the National Wages Consultative Council (NWCC) by June 30th for deferment.
Big companies who have implemented the legislation have been given a blanket approval for deductions, but any deduction exceeding MYR 50 per month for each foreign worker must be cleared with the labor department and be due to special circumstances.
As of January 1, 2013, the minimum wage in Thailand is set at THB 300 (US$10.34) per day. For Bangkok and six other relatively rich provinces, the minimum wage was set at 300 baht (US$9.76) per day as early as May 1, 2012. For other provinces, however, such as Tak, Surin and Phayao, the recently implemented wage policy represents a nearly 70 percent increase.
According to Indonesian law, local governments have the authority to set their own minimum wages, resulting in varied minimum wage rate from region to region. Minimum wages across all provinces, however, increased by an average of 18 percent in 2013, whilst increases in 2012 averaged 20 percent. Minimum wages currently range from IDR 22,00,000 (US$226.50) per month in Jakarta to IDR 8,30,000 (US$85.45) per month in Central Java.
Following the country’s rapid economic growth, in the past few years the Vietnamese government has increased minimum wages to combat inflation. As a result, the minimum wage in the country increased 26.8 percent on average in the years 2006-2010.
The minimum wage ranges from VND 1,650,000 (US$79.12) per month in remote areas to VND 2,350,000 (US$112.68) per month in the key cities of Hanoi, Hai Phong and Ho Chi Minh City.
A new law that grants workers the right to unionize and stage protests took effect on March 9, 2012. The law allows workers to form unions with a minimum of 30 members and to stage strikes if they give 14 days’ notice in advance. Furthermore, employers will be charged up to one year in jail and a fine of 100,000 kyat (US$113) if they dismiss workers for going on strike or joining unions. Workers can face up to one year in jail and a fine of 30,000 kyat (US$34) if they stage a strike without abiding by the law.
There is no general minimum wage in Myanmar, yet standards exist for certain sectors. For example, public employees are paid a minimum of MMK 50,000 (US$56.8) per month, whilst day laborers are required to be compensated at least MMK 2000 (US$2.3) per day of labor.
The Philippines
Minimum wages in the Philippines are decided by both sector (non-agriculture, plantation agriculture, or non-plantation agriculture) and geographical region. They range from PHP 419-456 (US$10.2 – 11.1) per day for non-agriculture work in the area around the capital of Manila, to PHP 205 (US$5) per day for non-plantation agriculture in certain peripheral regions. The average pay for non-agricultural work across all regions is PHP 280 (US$6.8) per day.
While national minimum wage rates have been discussed for some time in Cambodia, they have yet to be implemented. Minimum wage standards, however, do exist for the garment and shoe industry in the country. Divided by skill level, these standards provide apprentices a monthly minimum wage of KHR 126000 (US$31.60), probationary workers at least KHR 235200 (US$59) each month and regular workers KHR 256200 (US$64.3) per month. In addition, the two latter groups are entitled to a cost of living allowance of KHR 25200 (US$6.3) per month.
The national minimum monthly wage for private employees in Laos was nearly doubled from LAK 348,000 (US$43.5) to LAK 626,000 (US$78.15) in 2011, with the government also requiring employers to provide each employee LAK 8,500 (US$1.1) as a meal allowance per day.
While decidedly a first-world country, the Singaporean government has recently expressed concern over the number of workers in very low-paying jobs.
During a parliamentary talk in March 2013, the implementation of a minimum wage was discussed, yet it was seen as an inferior alternative to existing policies. There are presently no minimum wage limits in Singapore, with wages being decided by the open market in a regime similar to that of many high-income countries.
Currently, workers in low-paying jobs are assisted through the combination of the Workfare Income Supplement (WIS), the Workfare Training Scheme (WTS) and the Labor Movement’s Progressive Wage Model (PWM), aimed at maximizing the upside and minimizing the downside for low-wage workers.
Its labor protection laws are overall seen as highly progressive, and are commended in U.S. Department of State reports.
No minimum wage limits exist in the Brunei, however the topic was brought up in 2010, and was again under discussion during parliamentary sessions in March of this year. Government officials have stated that a comprehensive study of current operating standards in the private sector is necessary before legislative action can be considered. The public sector workers in oil-rich Brunei are typically well compensated.
While some worker protections exist in Brunei, including the right to form unions and the right to association, most do not apply to the approximately 88,000 foreign workers in the country.
This article was first published on ASEAN Briefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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