KUALA LUMPUR (Sept 6): It may be a meagre amount to some, but the new minimum wage that will come into effect on Jan 1 next year is a gesture much welcomed by many private sector workers who have long called for an increase.
Due to the country's current economy, the government can only afford a RM50 increase in minimum wage for workers in the peninsula and RM130 for those in Sabah and Sarawak.
The government is currently grappling with the massive debt it inherited from the previous administration when it took over in May.
However, the government has pledged to increase the rate to the RM1,500 it promised during the recent election as soon as the economy recovers.
Commited to the promise
The Deputy Minister for International Trade and Industry Dr Ong Kian Ming said the government is committed to fulfilling its promise within the next five years and would continue reviewing the minimum wage every two years.
The Prime Minister's Office had yesterday announced in a statement that the decision was made after taking into consideration the recommendations made by the National Wage Consultative Council.
“Any drastic increase in salaries would create other problems for industries and could jeopardise the nation’s competitiveness.
“It is wider for the minimum wage to be raised gradually in the coming years so that employers do not close down their businesses due to high operating costs that would lead to employee retrenchment,” he said in the statement.
The Malaysian Trade Union Congress (MTUC), meanwhile, viewed the bump in minimum wage as a long-awaited victory.
"The MTUC has been fighting for standardised minimum wage across Malaysia since long ago. We are thankful to the government for the increase," said its president Datuk Abdul Halim Mansor.
Even though the new minimum wage rate was not the RM1,500 they had fought for, he still hoped that the government would reconsider an increase to at least the RM1,200 currently enjoyed by civil servants.
Opportunity for locals
Abdul Halim hoped that the new minimum wage would result in the hiring of more local workers.
"I do not believe that our local workers are choosy, lazy or demanding. Our people are actually very hardworking but they need to be given a fair chance," he said.
He hoped that the ratio of local to foreign workers could be reduced to 10:1 in the future.
The Executive Director of the Malaysian Employers' Federation (MEF) Datuk Shamsuddin Bardan said that MEF welcomed the increase although it would greatly burden the employers in Sabah and Sarawak.
He said it would further burden employers who also had to pay the levy for foreign workers starting January of this year.
"The increase would benefit the 1.8 million foreign workers who are earning below RM1,200. They will now have more money to send back to their home countries and spend less in Malaysia," he said.
He said MEF was also expecting the cost of manpower to increase by 20 percent in the next two years in the peninsula and by 30 percent in Sabah and Sarawak.
Meanwhile, the Sabah Employers' Association (SEA) admitted that the new minimum wage rates would greatly affect them.
"SEA hopes the government can justify the decision to standardise the rate for minimum wage nationwide.
"The economic development between Sabah and the states in the peninsula vary greatly and that needs to be addressed first," said its president Yap Cheen Boon.
He highlighted a research by the Malaysian Industrial Development Finance Berhad (MIDF) in July 2018 that said Malaysia would only reach its development target for 2020 two years later, in 2022.
It revealed that Sabah, in contrast, would only reach that growth target in 2041, 21 years later.