Recently, human resource minister M Saravanan announced that the ministry is waiting for Cabinet approval to impose a new minimum wage rate of “around RM1,500 a month”. The new rate is expected to be implemented before the end of this year.
Commenting on the proposed new minimum wage rate, the Malaysian Employers Federation (MEF) said the new rate will kill many local businesses, especially small businesses – which are still recovering from the Covid-19 outbreak and the recent major floods.
“Malaysia will likely see a hike in its unemployment rate and business debts if the new minimum wage is implemented”
Datuk Dr Syed Hussain Syed Husman, the president of MEF responded that most businesses were not in a position to implement the proposed new minimum wage because they are still in economic recovery mode.
“The new minimum wage will push up the cost of goods and services. Operational costs will definitely increase, so this is not the right time.”
He further said most small and medium-sized businesses were suffering, and even a small increase in costs, like the increase in the minimum wage, could cause them to shut down.
Instead of increasing the minimum wage, the government should direct its efforts towards business recovery and controlling the rising cost of products and services.
“We must remember that micro, small and medium enterprises (MSMEs) make up over 90% of Malaysian businesses. So, when we talk about wages and cost, we must think of their survival and sustainability. MSMEs are suffering, and even a small increase in their cost, they will suffer and close down,” he said.
Datuk Syed Hussain also added that Malaysia will likely see a hike in its unemployment rate and business debts if the new minimum wage is implemented. Besides, he emphasised that raising the minimum wage to RM1,500 was not the solution for workers to earn higher wages, and that remuneration should be based on the performance of employees and the profitability of employers.
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