Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (Oct 24): The increase to the national minimum wage is unlikely to have much impact on rubber glove makers as over the past few years they have invested in automated production lines to cut reliance on labour.

Careplus Group Bhd chief executive officer (CEO) Lim Kwee Shyan said the impending increase in minimum wage as announced by Prime Minister Datuk Seri Najib Razak when tabling Budget 2016 in Parliament yesterday, will translate to about a 1% increase in glove makers' overall costs.

Under Budget 2016, the minimum wage for private sector workers in the peninsula will be raised from RM900 to RM1,000, and from RM800 to RM920 for those in Sabah, Sarawak and Labuan effective July 1, 2016. The minimum wage does not apply to domestic workers.

“The minimum wage hike can lead to some employees' salary increasing by as much as 12%, which will spiral to a wage increase across the board,” Lim told theedgemarkets.com.

“Fortunately, this time the government is giving us a longer time to prepare (for the hike)," he said.

“I believe we will be able to manage it well because the rubber glove industry has so far been able to withstand all challenges and is building up quite a strong platform,” Lim added.

He also said other measures announced by the government such as the special reinvestment allowance will help to cushion the minimum wage hike, while that to boost vocational training will aid the growth of the industry by increasing the number of capable, technical workers for hire.

The special reinvestment allowance, to replace the reinvestment allowance incentive which has expired, will be implemented at a rate of 60% of the qualifying capital expenditure and is allowed to be offset against 70% of statutory income from year of assessment 2016 to 2018.

Supermax Corp Bhd group managing director Datuk Seri Stanley Thai also holds the view that the minimum wage hike will not affect the industry in the medium- and long-term.  This is because the industry is gearing towards complete automation.

He said the introduction of the special reinvestment allowance augurs well for the growth and positive development of the industry.

Thai added that the allowance will assist the industry to continue maintaining its global positioning for the rubber glove industry in Malaysia.

An analyst with a local research firm, who declined to be named, said the impact of the impending minimum wage hike is expected to be less than 2% on the overall costs of rubber glove manufacturers.

“Most of the rubber (glove) counters I surveyed, are already paying their workers more than RM1,000 including allowance,” he said.

“So the impact is likely to be insignificant,” he added.

 

      Print
      Text Size
      Share