NEW DELHI, Jan 29 (Bernama) -– Malaysia's minimum wage policy is bringing joy to thousands of unemployed semi-skilled and non-skilled youths from South Asian countries, especially Nepal, according to a report.
Although the new policy is aimed at improving living standards in Malaysia, it is likely to have a positive impact on Nepal and other South Asian nations which rely heavily on remittances sent home by overseas workers.
"I was in a dilemma, whether to go to Gulf countries or Malaysia," Raj Kumar Niraula, who found it difficult to land a well-paying job after graduating from Tribhuvan University in Nepal, told Khabar South Asia.
Malaysia is one of the most popular labour destinations for Nepalis. However, the predicament was over when he came to know through a manpower agency that the Malaysian Government had recently announced it was raising the minimum wage, he said.
"I hope to make modest savings and also have a relatively better living standard while working in Malaysia," said Niraula, who comes from a village in eastern Nepal's Jhapa district.
Under the new policy – which went into effect at the start of the year -- the minimum wage has been set at RM900 ($295) per month, up from RM546 ($180), for workers on the Malaysian Peninsula, and a minimum wage of RM800 ($260) was set for workers in Sabah and Sarawak on Borneo.
Most companies in Malaysia would be required to begin paying the minimum wage within six months, though companies with no more than five workers would be given 12 months, said the government.
"The decision by the Malaysian Government will have a major impact on Nepal's economy. The remittance inflow from Malaysia will increase at least 40 per cent," said Nepal Association of Foreign Employment Agencies (Nafea) vice-president Kumud Khanal.
Though some have expressed fears that higher wages will reduce the demand for overseas workers, industry analysts say the impact will be limited.
Some multinational companies might opt for more capital-intensive technologies, following the wage hike, but this would not have adverse effects on Nepal, noted Khanal.
"The demand for foreign workers, including Nepalis, could come down slightly in coming years as companies may decide to lay off workers to cut down production cost. However, this will not have any immediate negative impact in remittance inflow," he said.
In Nepal, remittances account for an estimated 22 per cent of the total national income.
Nepali workers send home an estimated Rs80 billion (US$927.6 million) a year, from Malaysia alone.
The 2011 national census showed that over 1.9 million Nepalis worked overseas, more than 95 per cent of them in Malaysia, Qatar, the United Arab Emirates and Saudi Arabia.
According to the Ministry of Labour and Employment, the number of Nepali workers going to Malaysia through both formal and informal channels stands at around 400,000.
Malaysia received 98,367 of the total 384,665 Nepalis who left for overseas jobs during the fiscal year 2011-12.