KUALA LUMPUR (Feb 7): The Federation of Malaysian Manufacturers (FMM) expressed concern on Monday (Feb 7) about the proposal to raise minimum wage to RM1,500 a month from the current RM1,200, saying adjustments to wages must be done progressively.

"The proposal to increase the minimum wage by 25% to RM1,500 would have an undesirable impact on the economy especially in the present circumstances as the wage adjustments would precipitate increases at higher wage levels as well," said FMM president Tan Sri Soh Thian Lai.

He was responding to Human Resources Minister Datuk Seri M Saravanan's announcement two days earlier that a minimum wage of about RM1,500 was expected to be implemented before the end of this year.

In a statement, Soh said manufacturers are generally concerned about an immediate 25% increase in minimum wage but are receptive to a gradual increase under the current minimum wage review to a quantum to be decided by the National Wages Consultative Council.

"In this regard, it is critical for a tripartite discussion to be convened urgently to consider the announcement by the minister and to ensure that the tripartite platform is further expanded to ensure greater representation and diverse views from key stakeholders of the various economic sectors including FMM as the voice of the manufacturing sector," he said.

According to Soh, a more gradual increase in wage rate would still be able to address the increase in cost of living as a result of the pandemic and the supply disruptions that have ensued.

"In addition, employers have always maintained that any increase in minimum wage must commensurate with productivity increase as any steep increase in wage cost could adversely affect the overall cost and competitiveness of businesses," he said.

Soh said that with the necessary controls on cost increases in place by the government as well as concerted efforts by the industry to defray cost increases internally, FMM believes employers can continue to ensure that employees will not be affected.

This, he said, includes "being able to provide the yearly or contractual adjustments to wages, albeit it may be minimal for most depending on business performance".