Mixed views on minimum wage implementation

Its implementation might be at the wrong time as businesses are still recovering

by NURUL SUHAIDI / pic by TMR FILE

WITH less than two weeks to go, small business owners are still not ready for the implementation of minimum wage slated on May 1.

The Small and Medium Enterprises Association president Datuk William Ng maintained that the implementation is not at the right time as the businesses are still recovering from the economic slump due to the pandemic.

“It is irresponsible to mandate a 25% increase in minimum wage at a time when our SMEs are only starting to recover,” he told The Malaysian Reserve (TMR).

He also believes that any increment in wages must be tied to an increment in productivity, saying that Malaysia’s labour productivity declined by 5.6 % in the third quarter last year.

He contended that the interest for both business and working Malaysians are best served when payment is given based on workers productivity rather than minimum wage based on fixed working hours.

“This business model is common practice in developed countries. For instance, in Australia, employees are paid based on output. Housekeepers in hotels are paid based on room cleaned rather than hours worked,” Ng explained.

“Locally, we have also seen the ride hailing industry adopting this model allowing riders being paid primarily by jobs completed rather than by hours worked.

“Therefore, we urge the government to reconsider its decision to implement the increment now, and instead let the market decide on wages,” he said.

SME Association of Malaysia VP Chin Chee Seong said since businesses are still in a tough recovery stage, he believes that the economic players should have been given a six-month period to prepare for the implementation.

“Not only that, employers are also currently facing the main issue — workers shortage — especially in the 3D industry,” he said.

Similarly, the Malaysia Retailers Association had recently appealed to the government to revise the implementation requiring a further analysis to be made upon finalising the decision.

It said, the sudden spike in labour cost may lead to spiral inflation, giving additional pressure for most businesses which are already burdened by the hike prices in raw materials and transportation costs.

“This increase will lead to a hefty increase in operating expenses and the inflationary impact will be quite heavy for business,” it said in a statement.

Human Resources Minister Datuk Seri M Saravanan also reiterated that the government will go ahead with the increment in May to uphold the employee incentives.

“We follow the act (the National Wages Consultative Council Act 2011) where the minimum wage must be reviewed every two years.

“However, looking at the calls to revise the implementation, we can consider giving some leeway for the informal sector and companies with less than five employees,” he told the media.

He hopes that businesses won’t be taking advantage of the leniency and will follow the regulation when it comes into force.

Meanwhile, La Juiceria Superfoods Sdn Bhd co-founder and director Annabelle Co-Martinent and Kong Len Win stated that the adoption will have a less impact on enterprises in the Klang Valley compared to those in rural or semi-rural areas.

“This is because the basic salary in Kuala Lumpur has already been in that range since the recovery from the pandemic and our business is not impacted from the implementation,” she said.

However, noting that the cost of living varies from region to region within Malaysia, she said the increase might not be a one size fits all solution.

“For the rural and semi-rural, where cost of living has remained manageable, the decision to increase the minimum wages should be implemented in stages,” she said.

Nonetheless, she urges businesses to acknowledge the increment will also positively impact the majority livelihood both Malaysians and foreigners alike working in Malaysia even though it will pose a significant impact for businesses.

“Looking at the current minimum wages in the country, there’s no way we can expect employees to sustain the ever-increasing cost of living without raising their minimum wages,” Annabelle stressed.

She said the cost of running business has been increasing since past years compared to pre-pandemic, and her business continued absorbing the rising costs.

“In that regard, we try to balance the rising costs and external pressures as much as we can, so that our customers get the best value and staff are earning enough to sustain their cost of living,” she added.

CEO and co-founder of PitchaEats, a social enterprise, Kim Lim said she deeply believes businesses should be paying a decent salary to people who are living in an area where inflation is increasing.

“It is getting tougher to live by with a salary that doesn’t meet the living standards of the area,” she told TMR.

Founded in 2016, PitchaEats’ mainstay business is to empower the refugees in Malaysia through catering and home cook group meal business made by refugee’s chefs to its clients.

“As for the refugees that we partner with, they usually would already be earning based on sales. Here, there’s no fixed salary per say because we are not allowed to do so,” Kim concluded.