Manufacturers welcome increase in minimum wage rates

The Federation of Malaysian Manufacturers welcomes the decision by the Cabinet to heed the industry’s call to moderate the minimum wage increase and to implement it only from 1 January next year. The FMM said in a statement that “the consideration given to the current challenging economic conditions and regulatory environment affecting businesses is greatly appreciated.” FMM described the increase in the monthly minimum wage for Peninsular Malaysia from RM1,000 to RM1,050 as reasonable. “Although it is unfortunate that the move to equalise rates across the country has to be initiated in one painful move resulting in a RM130 increase for employers in Sabah and Sarawak, the industry views the announcement as positive and would help to alleviate to a certain extent regulatory burdens and their impact on the costs of doing business,” it said. FMM added that the four-month lead time before implementation would allow the industry to make necessary budgetary adjustments. The adjustments include addressing knock-on effects where salaries of staff earning at and near the minimum wage level have also to be adjusted to maintain wage differentials between grades and seniority. FMM expressed hope that the government would provide some forms of assistance to employers in Sabah and Sarawak to help mitigate the 14 per cent hike in wage cost. “We also hope the government will continue to consult closely with the industry in deploying its phased increase approach. Early consultation will reinforce goodwill as well as give greater certainty and clarity on the mechanism to help businesses in planning their operations and strategies,” it said. FMM represents over 10,000 member companies from the manufacturing supply chain.

The Prime Minister’s Department yesterday announced that the minimum wage has been fixed at RM1,050 from 1 January 2019. A statement from the Prime Minister’s Ofice said Malaysia will have a uniformed minimum wage of RM1,050 per month or RM5.05 per hour starting next year. It said the move was made following recommendations by the National Wage Consultative Council (MPGN). The increase in the minimum wage is said to be in accordance with the current economic situation.

“However, we have to be wary of any drastic salary increase that could lead to other problems to industries and jeopardise the country’s economic competitiveness. “As such, the minimum wage should be increased gradually so that businesses, especially small businesses, are not forced to shut down due to sudden increases in operating costs,” said the statement. Businesses and employers are also urged to not increase the price of good and services following the minimum wage increase as the Domestic Trade and Consumer Affairs Ministry have been asked to monitor the situation closely.

Meanwhile the Malaysian Trades Union Congress (MTUC) described the new minimum wage as “beggarly”. In a statement, it said the move only reflected “corporate exploitation through the government”. “Despite ratifying the ILO Convention 131 on minimum wage fixing which came into force on June 7, 2017, the government has failed to take into consideration the needs of the workers and their families. MTUC secretary-general J Solomon said the increase of RM50 for the peninsula and RM130 for Sabah and Sarawak was a “pittance” and still below the poverty line of RM1,180 for Sabah.

In Klang, Member of Parliament for Klang Charles Santiago called on the government to review the minimum wage increment immediately, citing the RM50 bump as an “insult to 15 million labourers in Malaysia”. “Anyone who goes to the wet markets, where prices are supposed to be way cheaper than supermarkets, or walks into a clinic for a common cold would know that no one can live on RM262.50 a week,” he said in a statement. Charles noted that if the minimum wage were to be reviewed every two years, it would still be impossible for the government to raise the minimum wage to RM1,500 within the next five years. He also pointed out according to the Bank Negara 2017 Annual Report, the expenditure of the bottom 40% (B40) of Malaysian households expanded at a faster pace compared to their income.