I am writing to voice my opposition to suggestions by DAP, Mahathir Mohamad and the Malaysian Trades Union Congress (MTUC) to introduce a minimum wage law in Malaysia.

It is claimed that a minimum wage law is both beneficial to the poor working class as well as the economic competitiveness of the country. I seek to debunk that myth as well as point out the fallacies of their arguments.

Economists have long argued that minimum wage laws disadvantages the very people they were meant to help while helping the middle-class workers. This is because most low wage workers earn a low wage because they are low skilled. A big part of their ability to compete with higher skilled workers is the price of their labour.

To illustrate the point consider this: if there are 10 employees at a company, five of whom are paid RM1,000 and the other five are paid RM2,000. In most companies, the RM2,000 workers are better skilled, more productive workers than the RM1,000 workers.

If the minimum wage law is introduced and set at RM2,000, the employer has no choice but to raise the wages of the lower paid workers to RM2,000.

But when a RM1,000 worker leaves do you think the employer will continue to hire a lower skilled worker and pay him/her at a wage that is above what he/she is worth? Or will he look at hiring someone who is actually worth RM2,000?

In the same company, what happens when an economic downturn hits and the company needs to retrench workers? In a free-wage world, the company is just as inclined to sack the high skilled as well as the low skilled: productive workers are good, but less productive workers mean less salary expenses which is invaluable during bad times. In a minimum wage world, the RM1,000 workers will most definitely be the ones who suffer.

I also find the deep trust by these people in our government's ability to enforce such laws astounding. Our government's track record at any law enforcement (that does not personally implicate senior political leaders) is appalling by any standards. Even if we do pass such a law, I think it is absurd to believe that our government will have the resources and the ability to enforce the law strictly and impartially.

One can easily imagine a situation where honest business people are put at an unfair disadvantage because the obey the laws, while unscrupulous businessmen continues to exploit workers by colluding with corrupt law enforcers.

Finally, I find the argument laid forth by DAP vice-president M Kulasegaran fallacious and illogical. Kula argued that "many countries like Japan and USA do have minimum wages but yet their economy is doing better than us. So the Minimum Wage Act is feasible," he said. If we wish to emulate the success of someone, it is rather silly to emulate their every step. We should first consider which of their actions resulted in their success and emulate those actions only.

Following from Kula's logic, since Barack Obama smokes, we should too. Japan achieved prosperity via hard work and a national obsession with quality. The USA achieved their economic might via the entrepreneurial spirit and creativity of its people. They achieved greatness despite minimum wage laws, not because of it.

To focus on the minimum wage and not the real factors of their success is completely missing the point. If we can capture their diligence, boldness in risk taking and creativity, then surely greatness is ours.

What then protects workers? Milton Friedman, a Nobel prize winning economist rightly pointed out in his book "Free to Choose" that the best protection any worker can receive is by having more jobs than workers. If a worker can quit today and find a job the next day, he/she wouldn't be exploited.

If companies had to fight long and hard for workers they'll ensure the welfare of their employees. This is far more effective than any laws or regulations can offer. On the other hand, if there are not enough jobs to go round, companies have the upper hand and workers will rather suffer in silence then to bring things up with the authorities and lose their jobs.

To summarise, I believe that not only are minimum wage laws ineffective, but also has the potential to do long-term damage to our welfare and national economy. It doesn't address the core issues that cause low wages and workers exploitation and that there are far better ways of raising the welfare of our most vulnerable workers.