Govt to incur RM1b to subsidise minimum wage hike


The government is estimating a cost of RM1 billion to subsidise the private sector on the proposed increase of the minimum wage to RM1,500.

Human Resources Minister M Kulasegaran (picture) said the government has proposed to bear half of the minimum wage hike to ease the burden of employers in the country.

This would mean the government will bear RM250 per employee once the minimum wage is raised.

The government believes a higher minimum wage policy is in the interests of the people and should be implemented in line with the state’s financial restoration measures.

“There is no denying the enforcement of the new minimum wage for all private-sector employees in the country will involve an increase in costs to private employers as well as to the government indirectly.

“However, the implementation is prudent in line with the process of recovering the country’s financial position,” he told the Dewan Rakyat yesterday.

He was responding to a supplementary question from MP Datuk Azizah Mohd Dun (Umno-Beaufort) who asked on the cost the government will bare when the minimum wage is increased.

The minimum wage rate now is RM1,000 for Peninsular Malaysia and RM920 for Sabah, Sarawak and Labuan.

Pakatan Harapan, in its election manifesto, pledged to standardise and increase monthly minimum wages to RM1,500 by the first five-year term.

Kulasegaran said the new minimum wage rate will not discriminate between local workers and foreign workers.

“The minimum wage policy shall not discriminate against an employee based on citizenship in accordance with the International Labour Organisation Convention No 100, an equal remuneration which has been ratified by Malaysia in 1997.

“At the same time, in Section 60L of the Employment Act 1955, Section 118B of the Sabah Labour Ordinance or Section 119B, and the Sarawak Labour Ordinance do not allow any form of discrimination between local and foreign workers,” he added.

Kulasegaran said the National Wages Consultative Council has completed the review of the Minimum Wage Order 2016 and the recommendation will be tabled to the government in the very near future.

“In the absence of any obstacle, the new Minimum Wage Order will be gazetted in a month’s or two months’ time,” Kulasegaran said.

Kulasegaran said various factors are taken into account when reviewing the Minimum Wage Order, such as socioeconomic indicators like changes in Consumer Price Index, productivity growth rate, employer’s ability to pay salaries, unemployment rate, poverty line income and so on.

“We will have to consider the interests of the employers, employees and also the government according to affordability,” he said.