The data supports the sentiments such as "SMEs are important to our economy as they create most of the employment" kind of thing. I agree. Now look at the average wages they paid to the workers. Here is the question: if we keep increasing the minimum wages, and enforce it, who are to win and who are to lose?
Friday, November 14, 2008
Minimum wages and SME
From Sensus Ekonomi 2006 (quoted from a seminar presentation):
The data supports the sentiments such as "SMEs are important to our economy as they create most of the employment" kind of thing. I agree. Now look at the average wages they paid to the workers. Here is the question: if we keep increasing the minimum wages, and enforce it, who are to win and who are to lose?
The data supports the sentiments such as "SMEs are important to our economy as they create most of the employment" kind of thing. I agree. Now look at the average wages they paid to the workers. Here is the question: if we keep increasing the minimum wages, and enforce it, who are to win and who are to lose?
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These 2 posts might start to give one the impression as if MW is the only thing that should be.
ReplyDeleteWhy the need to leave it to a third party to set wages?
To what extent should MW be allowed? Why think win-lose in the first place?
How about voluntary transactions?
Anon -- seriously, you do think that these posts lead to your (or anyone's) impression that MW is the only thing that should be?
ReplyDeleteap, don't be too upset for being misunderstood :-)
ReplyDeleteMaybe you just need to be more blunt and less rhetorical here and wrote: there is a clear trade off between MW and helping SME, as well as between MW and unemployment.
Or, you can't eat the cake and have it too
ap & rizal, perhaps you guys could expand a bit and offer your take on priorities: since we can't have it both ways, should we keep the cake, or eat it?
ReplyDeletecan we see it the other way?
ReplyDeleteminimum wage can provide a filter such that only efficient SMEs survive (i.e. SMEs that are efficient enough so they can pay MW). in the end, we have productive and efficient SMEs; which I think is good.
what's wrong with this thinking?
Rizal -- I guess you're right. I've been too much in the 'ask-question-don't-provide-answers' teaching mode.
ReplyDeleteTirta -- my conclusion: 1) don't set MW too high, 2) use MW as safety net wage and not as a tool for collective bargaining, 3) promote bilateral bargaining for wage setting, 4) fix the collective bargaining institutions as a precondition for (3), by introducing code of conduct ans some other measures.
Roby -- then it means we can't SMEs as a significant source of job creation.