Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on December 24, 2019

KUALA LUMPUR: Putrajaya’s decision to raise the minimum wage to RM1,200 in major towns would result in an estimated RM2.5 billion additional remittances out of the country by foreign workers annually, says the Malaysian Employers Federation (MEF).

Its executive director Datuk Shamsuddin Bardan said currently foreign workers are repatriating about RM34 billion annually, and this excludes remittances made by illegal foreign workers.

“The foreign workers would repatriate the extra income to their home countries resulting in the ringgit being further weakened,” he said in a statement yesterday.

Shamsuddin said the government should shoulder half of the burden of employers arising from the increase in the minimum wage or keep the wage at status quo.

The Pakatan Harapan government, he said, had promised to equally share the burden when it pledged to raise the minimum wage from RM1,000 to RM1,500 in its election manifesto.

MEF said representatives of 37 employer and business organisations gathered at its office yesterday to express concerns over the latest increase in the minimum wage to RM1,200 in major cities and towns. They complained of unfair cost increases, discrimination and breach of election manifesto.

Shamsuddin said all the costs of the recent increases in minimum wages are wholly borne by the employers.

“This is unfair and reflects lack of integrity on the part of the Pakatan Harapan government in fulfilling their promise to share 50% of the cost increases for setting higher minimum wages,” he said.

“Malaysia is affected by the sluggish global economy and this is reflected by the high number of retrenchments. If the government cannot fulfil their promise to share 50% of the cost then there should not be any further increases in minimum wages. The status quo should remain,” he said.

He said the government’s decision caused distress and anxiety among the employers and employees as the demarcation of geographical boundaries is unclear.

For example, he said the palm oil industry will face major problems as the estates were located within the 57 major cities and towns and also the other local councils.

Therefore, he said such plantation estates will be subjected to a lot of scrutiny by the Roundtable on Sustainable Palm Oil and Malaysian Sustainable Palm Oil in terms of alleged discriminatory practices.

“We urge the government to reconsider its decision to raise minimum wages at this juncture as it would be too burdensome on private sector employers,” he said.

Since Jan 1, 2018, the minimum wages were reviewed upwards three times from RM1,000 and RM920 (for Peninsular Malaysia and Sabah and Sarawak respectively) to RM1,050 and RM970, and thereafter to RM1,100 across Malaysia.

The increase in minimum wage to RM1,200 was first announced during the Budget 2020 on Oct 11, 2019 for big cities. However, the announcement by the ministry of human resources on Dec 18 extended the coverage for minimum wages of RM1,200 to 57 cities and towns.

Shamsuddin claimed that the revisions of minimum wages for three times since 2018 are against the principle laid down in the National Wages Consultative Council Act 2011, which provides that minimum wages may be reviewed every two years.

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