Subscribe to our Telegram channel for the latest stories and updates.

Raising the minimum wage to RM1,500 monthly “will kill businesses”, according to the Malaysian Employers Federation (MEF) who urged the government to scrap the proposal set by the government.

Based on reports from The Vibes, MEF President Datuk Syed Hussain Syed Husman was quoted saying that setbacks from Covid-19 and the recent floods have negatively impacted them and they might not be ready or have the capacity to implement a wage hike.

They will suffer and close down even if there is a small increase in their cost, what more an increase of RM300 to RM400 per month on top of the existing minimum wages. The grim economic scenario does not allow any space for an increase in existing minimum wages. It is important that decision-makers keep this in mind before implementing any increase.

MEF President Datuk Syed Hussain Syed Husman

Human Resources Minister Datuk Seri M Saravanan said previously that the government wants the minimum wage to increase from RM1,100 and RM1,200 for major cities to RM1,500 by the end of the year but it depends on the decision of the Cabinet, based on reports from Berita Harian.

Syed Hussain mentioned that the bulk of local businesses (98.9%) is made up of micro, small and medium enterprises, and the government needs to also consider their survival and sustainability.

Government should focus on recovery instead

Syed Hussain sees that it’s better for the government to focus on business recovery and controlling rising costs instead of raising the minimum wage.

With the increase in salaries, he warns that eventually, operation costs will also increase.

He also stated that raising the minimum wage will mean that more people will be unemployed.

Debts will increase, and businesses will find it difficult to service their loans. Some are saying that it is better for them to move their operations to other Asean countries where the overall cost of doing business is much cheaper.

MEF President Datuk Syed Hussain Syed Husman

Wages and remuneration, he said should instead be given out based on the performance of employees and how much employers are making.

It’ll only benefit foreign workers

Raising the minimum wage rate to RM1,500 is likely to benefit foreign workers rather than locals because, according to Syed Hussain, Malaysians earn more than that.

In this scenario, the country could see more outflow of cash, as for every RM100 increase in salary, around RM4 billion each year on average will be sent out.

Currently, he said, it is estimated that legal migrant workers are remitting about RM34 billion a year through official channels and the increase of RM300 to RM400 will cause an additional outflow of between RM12 billion to RM14 billion per year.

Subscribe to our Telegram channel for the latest stories and updates.