Proposal should be refined taking into account the current global economic downturn and rising inflation
by ANIS HAZIM / pic by MUHD AMIN NAHARUL
THE Malaysian Security Industry Association (PIKM) is dissatisfied with the government’s proposal to raise the minimum monthly wage to RM1,500 from the current RM1,200.
President Datuk Seri Ramli Yusuff said that the proposed increase will hugely impact PIKM members.
“This is given that the previous minimum wage adjustment has yet to be paid, so PIKM urges the government to reconsider the proposal,” he said at a press conference yesterday.
He said PIKM is aware that the minimum wage requirement can benefit the workforce, however, this proposal should be refined taking into account the current global economic downturn and rising inflation.
“It is not impossible that the increase in the minimum wage will result in negative profits for employers in the security industry.
“This situation could lead to the phenomenon of businesses closing down for most of the 900 security companies, with the majority being Bumiputera traders,” he added.
Ramli stressed that the government should understand the existing cost structure adopted by security control service providers and how the minimum wage increase will affect their operations.
According to him, the hourly calculation based on the current minimum wage of RM1,200 is RM8.76 which includes salary, overtime, Employees Provident Fund, Social Security Organisation, Human Resources Development Fund and Employment Insurance System payments.
“As a result of the increase in the minimum wage, PIKM members find it difficult to cover the mandatory payments because the rates offered by customers — whether government or private — are low,” he noted.
He said with an increase of 25% from the current minimum wage, every element of mandatory payments will also increase proportionally.
Thus, security companies can either increase the price of their services or make the necessary reductions to fixed costs and other variable costs to absorb salary increases and other expense benefits.
“The estimated monthly salary will increase to RM3,300 and the additional cost will exceed RM700 for each security guard.
“This means that the service price per hour will be approximately RM11 to enable the security company to make a profit of 10%,” he said.
Meanwhile, PIKM has previously presented the cost structure issue to the Human Resources Ministry, who recently promised to look into it, but no feedback or treatment has been provided.
“The impact of failing to pay the previous minimum wage adjustment to some PIKM members has not been fully resolved.
“Of course, the security companies involved have cashflow problems because they rely on timely payments,” Ramli added.
PIKM is confident that the increase in the minimum wage is not conducive and will create a bad atmosphere for the private security industry.
“Therefore, PIKM appeals to the government to postpone the proposed increase in the minimum age and review the implications for security companies which also belong to the small and medium enterprises,” he further said.
Moreover, he said the government should involve PIKM to look at the operating cost structure of the security company.
Currently, the association has sought to meet with the finance minister, chief secretary to the government and head of government agencies to give the same explanation but has not yet received any feedback.