MARCH 29 — Right, so they’re raising the minimum wage soon. May 1 to be exact. 

I can’t think of a better way to celebrate Labour Day — won with blood, mind you — than to pay our largely underpaid and angry workforce more.

The amount, announced unexpectedly by Prime Minister Datuk Seri Ismail Sabri Yaakob on March 19 in the thick of the Umno annual general assembly, will be RM1,500. 

It’s a 300 ringgit bump; not exactly big news since it's the same rate once pledged by Pakatan Harapan leaders, and one of few promises that likely won them federal power in 2018.

Notwithstanding the fact that the increase was announced at a political event, controversial considering it’s official policy, not much is known about the process behind that decision apart from the occasional soundbites by the Human Resources Minister and his deputy in the last few years that the matter was being "studied.” 

A Forbes writer once wrote that few political arguments are as polarising as the minimum wage debate. It’s universal. 

Lowly-paid workers say it’s long overdue while investment bankers and employers lobby groups repeat the same argument about how raising minimum wage will drive labour costs up and consequently manufacturers will have to increase prices of their end products or services to offset the salary increment. 

Ultimately, consumers will have to pay more. Sounds bad for everyone.

Here's the thing: "Analysts” have been repeating the same predictions, estimates, projections whatever since talks about the minimum wage first came into the Malaysian psyche (whenever that was), but most of it are either anecdotal or guesstimates at best. 

For example, the most popular point raised about a higher minimum wage is always wage-push inflation — that happens when demand rises to commensurate the rise in wages. 

But there are economists who will argue that's an arcane and simplistic way to look at it. There are so many other variables to consider before you can arrive at that conclusion. 

One simple question that seems to be missing in the local minimum wage debate is if the rate of the wage bump commensurates or is in tandem with the rate of inflation in the last five years? 

A money changer counts ringgit at a shop in Putrajaya, outside Kuala Lumpur October 26, 2007. — Reuters pic

Isn’t that how salary increments are generally based on? If it does, wouldn't it neutralise the wage-push effect? 

Then there is the usual warning about companies shedding jobs to offset the rise in overhead costs. 

Remember the bold claim made by industry lobby groups at the turn of the last decade that thousands of small and medium businesses would shut down if we pegged the minimum wage at RM900 (RM800 for Sabah and Sarawak)? 

When we finally enforced the floor wage policy in 2013, did it happen? 

Let’s be frank, nobody seems to know for sure because the problem with us — and our Asean neighbours at that – is that there has never been any serious research or effort undertaken to study the localised effects of a minimum wage policy. 

And even if there was any, it would have been as deep as a Justin Bieber song. We can try Google for any working paper on the subject. 

I tried, and found only a World Bank citation that mentioned exactly the problem I just explained.

"Evidence of the impact of minimum wage policies in the East Asian context and in Association of South-East Asian Nations (Asean) countries, more specifically remains very limited,” the World Bank wrote in 2014.

"A thorough literature search identified only a few rigorous studies of the impact of minimum wages on important welfare outcomes in Asean countries, and some of the evidence was narrowly focused on one sector and period or from a time when the institutional setup and management of the policy was different from today.”

So here’s what we know for sure. 

It’s fairly accurate to say the local debate around raising a minimum wage, or just a minimum wage policy even, are mostly based on obsolete, anecdotal or arcane theories. 

All those "expert” projections on wage-push inflation? Hardly any concrete data supporting it. How a higher minimum wage would shutter thousands of small businesses? Nobody seems to have bothered to see if the first minimum wage rate did in fact close down thousands of these mom and pop shops?

Nor do we know how the government has arrived at this sum of RM1,500. Yes, raising salaries is always a good thing, we know that much. 

But do we know if RM1,500 is enough? Will it yield the desired effect to get lowly-paid workers out of poverty? 

There’s probably a methodology to calculate these things but even so they’re likely based on practices elsewhere.  

As with most things here, nobody seems to have any real answers.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.