Malaysian Government under fire over new minimum wage

The Human Resources Ministry has come under fire from both employer and employee groups over the increase in the minimum wage and the manner in which it will be applied.

Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said he was surprised that the new RM1,200 minimum wage for “major cities” announced in Budget 2020 included 42 smaller towns. “According to the housing and local government ministry gazette, there are only 15 city councils, but what was announced was that the new minimum wage would apply to 57 cities and towns,” he said. He added that business was not good for many companies and that many were trying to avoid retrenchment. “The situation is especially bad for some industries like media and retail,” he said. “We’ve seen companies like Giant and Cold Storage announcing the closure of stores because of the economic climate.” Up until September this year, Datuk Shamsuddin added, some 23,000 people had been retrenched. He expects this figure to hit the 30,000 mark by the end of the month. He also urged the government to bear in mind that the main beneficiaries of the increase in minimum wage would be foreigners as many Malaysians are already paid above this amount. “Foreign workers will remit most of their earnings back, so their increased wages will not benefit the local economy,” he said, adding that businesses would incur higher costs which would in turn be passed to consumers. “So, Malaysians will end up paying more for goods and services.”

Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said how the 57 areas were chosen was ambiguous and not clear. “The ministry should state the per capita income of the 57 towns,” he said. Tan Sri Soh said areas like Jempol, Langkawi, Taiping, Manjung, Kemaman, Dungun, Kubang Pasu and Padawan should be properly defined before they were listed. “The Human Resources Ministry should hold a consultation immediately with relevant stakeholders on the definition of the areas chosen and the method of implementation of the minimum wage,” he said. He also questioned whether the ministry had consulted stakeholders before coming to its decision, which did not give manufacturers much time to prepare. “The notice period given by the government was too short for such a minimum wage to be implemented by manufacturers in these towns. “Furthermore, this minimum wage is supposed to be gazetted under Minimum Wage Order.“The time given to employers is too short for any proper preparation,” Tan Sri Soh added.

It was reported Wednesday that the minimum wage in 57 cities and towns will be raised to RM1,200 monthly from 1 January 2020. A Human Resource Ministry statement said it would benefit workers in 57 locations, including all 13 state capitals and three federal territories. The statement said the minimum wage for non-urban areas, small towns and rural areas would remain at the present rate of RM1,100.

The statement added that the decision for the new minimum wage in cities was decided by the Cabinet on 6 December after the tabling of the 2020 Budget. “The higher cost of living and expenses in cities as compared to small towns and rural areas led to the decision made by the Cabinet. “The new minimum wage decision was done for those working in major cities, and it is expected to be gazetted very soon.” The ministry said the new wage would also apply to the private sector as stated under Section 2 of the Employment Act 1955 (Act 265), Sabah Labour Ordinance (Chapter 67) and the Sarawak Labour Ordinance (Chapter 76). It said the minimum wage rates must be paid according to the National Minimum Wage Order 2019. “Minimum wage rates will be constantly reviewed to ensure that they are in line with current cost of living and needs. “The government also hopes to raise the minimum wage to RM1,500 within the first five years of the Pakatan Harapan administration,” it said.



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