The Malaysian Reserve

FMM supports minimum wage increase

A worker during observing the lime trees leading to always be in good that as a preparation planted during the festive season on Chinese New Year at Sungai Buloh Area in Selangor (Pic By Muhd Amin Naharul/TMR)

By NG MIN SHEN / Pic By MUHD AMIN NAHARUL

LOCAL manufacturers view the government’s move to increase the rate of minimum wage to RM1,050 as reasonable and within the level of an earlier request for the amount to be moderate.

The Federation of Malaysian Manufacturers (FMM) said in a statement that the government’s decision, taking into account the current challenging economic conditions and regulatory environment that are affecting businesses, is greatly appreciated.

“The announcement to increase the minimum wage rate for Peninsular Malaysia from RM1,000 per month to RM1,050 per month is reasonable,” FMM’s statement read.

While the initiative to equalise rates across the country is deemed “one painful move resulting in a RM130 increase for employers in Sabah and Sarawak”, the industry sees the announcement as positive.

FMM said the effort would help alleviate, to a certain extent, regulatory burdens and their impact on the costs of doing business.

It said the four-month lead time before implementation on Jan 1, 2019, would also allow the industry to make the necessary budgetary adjustments.

Companies will have the time to address knock-on effects whereby salaries of staff earning at and near the minimum wage level also have to be adjusted to maintain wage differentials between grades and seniority.

However, the manufacturing body expects adjustments to be less extensive in Peninsular Malaysia this time around.

“While the industry in the peninsula understands that the government is not able to share the burden of this increase, FMM hopes that other forms of assistance could be extended to employers in Sabah and Sarawak to help mitigate the 14% increase in wage cost,” FMM stated.

FMM also suggested the government to continue consulting closely the industry in deploying its phased increase approach.

The federation added that early consultation would reinforce goodwill as well as provide greater certainty and clarity on the mechanism to help businesses in planning their operations and strategies.

The Prime Minister’s Department on Wednesday said the minimum wage in Malaysia will be set at RM1,050 per month or RM5.05 per hour, beginning next year.

This was announced following recommendations by the National Wage Consultative Council, which in turn had reviewed the Minimum Wages Order 2016.

The order had allocated a minimum monthly salary of RM1,000 for Peninsular Malaysia and RM920 for East Malaysia.

The statement also said no subsidies will be granted to employers due to the current financial constraints faced by the government.

Saddled with government debt and liabilities of RM1.09 trillion, the present administration has been making efforts to cut back expenditure, including delaying or cancelling several mega infrastructure projects and divesting its stakes in non-core companies, as well as selling land assets.