Semiconductor Association: 40% of E&E firms’ workforce to be impacted by minimum wage hike

Semiconductor Association: 40% of E&E firms’ workforce to be impacted by minimum wage hike
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KUALA LUMPUR (April 28): The Malaysian Semiconductor Industry Association (MSIA) said on Thursday (April 28) that it is “extremely disheartened” with the government’s decision to increase the minimum wage from the current RM1,200 to RM1,500 effective May 1 (Sunday).

“With the gazetting of the Minimum Wages Order 2022, the government has not taken any of the recommendations from the many industry associations,” the association said in a statement.

MSIA on Thursday revealed that a survey conducted on its members showed that about 40% of electrical and electronics (E&E) companies’ workforce will be directly impacted by the Minimum Wage Order 2022.

“The gross monthly salary for workers will increase by an additional RM450 per month (basic wage increase of RM300 plus statutory contributions (EPF/SOCSO/HRDF/EIS) and other allowances, bonus and incentives),” it said.

Moreover, the compression of salaries at different levels will have a knock-on impact on a further 23% of E&E companies’ workforce, the association added.

By extrapolating the survey to the entire E&E industry, MSIA said the impact would be an additional gross salary of RM111 million per month or RM1.3 billion per year for 40% of the total industry workforce of 590,000 who will be impacted by the Minimum Wage Order 2022.

It is estimated that the percentage of E&E workers impacted by salary compression is 23%, or 136,000 workers.

“The impact to the industry is very substantial. The E&E industry will not be able to immediately pass on these costs to its customers where long term agreements on pricing are in effect. MSIA members will struggle to mitigate the effect of additional wage costs, when they are already affected by cost increase in raw materials, Covid-19 SOP implementation, power, logistics and many other costs,” it stressed.

MSIA had in March appealed to the government to consider a more gradual increase in the minimum wage, to be spread out over the next three years.

The association president Datuk Seri Wong Siew Hai had stated that the minimum wage hike is “too much too soon” and “E&E companies do not have sufficient time to make adjustments to the wage structure and productivity improvements in order to remain competitive.”

MSIA’s members include Bursa Malaysia-listed companies Inari Amertron Bhd, Greatech Technology Bhd, JF Technology Bhd, Globetronics Technology Bhd, ViTrox Corp Bhd, Pentamaster Corp Bhd, UWC Bhd, QES Group Bhd and K-One Technology Bhd.

Its MNC members include Intel, Dell, Micron, Broadcom, Jabil, Hotayi Electronic, Renesas, Texas Instruments, Infineon, Agilent Technologies, Keysight Technologies, Osram, Western Digital and Analog Devices.