Minimum wage: Malaysian firms worried about spike in costs
Owners of small businesses warn that 80% of them will have to close down
Published The Straits Times, 7 Mar 2012
PETALING JAYA: Representatives from 16 Malaysian business and manufacturing associations have voiced concerns about a sudden increase in costs due to a minimum-wage deal that the government is expected to announce soon.
Owners of small and medium-sized industries (SMIs) warned that up to 80 per cent of operating companies in Malaysia may close down if a blanket minimum wage is introduced, according to the Malaysian Insider news website.
The SMI Association of Malaysia told a news conference yesterday that SMIs employ 59 per cent of the labour market, or seven million workers.
'About 80 per cent (of SMIs) are micro-SMIs, which are labour-intensive and employ the majority of these workers, a total of about four million. Their profit margins are only between 3 per cent and 5 per cent.
'Basic wage not including incentives is about RM650 (S$270) now but if it is increased to RM800, they will be totally killed,' said association vice-president Michael Kang.
Reports have suggested that a minimum wage of between RM800 and RM1,000 a month would be introduced, as pressure mounts on the government to ensure that private-sector workers earn salaries above the poverty level.
While the minimum wage has yet to be set, the Malaysian Trades Union Congress, an umbrella body of unions with 800,000 members, has asked for at least RM900 per month, not including allowances, and a review every two years.
Malaysian Plastics Manufacturers Association president Lim Kok Boon said yesterday that an increase in base wages from RM650 to RM900 would increase average wage bills from 15 per cent to 19.6 per cent of manufacturing cost.
'With an average profit margin of about 5 per cent, we will be just above water. Increase it to RM1,000 and it's goodbye,' he said.
Mr Lim, whose association represents over 1,500 companies, said that this was a 'best-case scenario' as many plastics manufacturers were already operating at a loss.
'It's short-term gain, long-term loss,' he said.
The opposition also said yesterday that the introduction of minimum wage cannot be done in 'isolation' and that 'holistic reforms' must also be implemented to the labour market.
'Funds from the federal budget should be allocated to a special facilitation fund to help entrepreneurs, SMIs and small firms retool, mechanise and adjust their operations to create new jobs,' said Democratic Action Party international secretary Liew Chin Tong.
Former prime minister Mahathir Mohamad said last week that Malaysia may become bankrupt, as is happening now in the West, if the federal government caved in to public pressure and set a minimum wage policy.
Still influential despite having retired in 2003, Tun Dr Mahathir warned that the federal government's seeming haste to adopt a minimum wage policy without taking into account the spike in public holidays to include the weekends and the holy days of all major religions was a serious risk to the country's economy.
'Increasing incomes must raise the cost of production unless there is a corresponding increase in productivity,' he wrote in a blog posting.
Human Resources Minister S. Subramaniam, however, said implementing a minimum wage policy will not cause the Malaysian economy to collapse, according to The Star.
He said there were over 80 countries that have introduced minimum wage, with countries such as Britain and the United States having it for a long time, and their economies did not collapse.
He said the government had considered all concerns and a minimum wage would not have an undue impact on the overall economy of the country.
'Our wages are much lower than that in the economies that we should compete with, such as Singapore, Taiwan, Japan and South Korea.
'We are similar in terms of development but our wages are much lower, which means we still have the capacity to increase our wages and at the same time maintain our economy.'
Malaysia's minimum wage to be revealed soon
Published The Straits Times, 6 Mar 2012
Published The Straits Times, 6 Mar 2012
KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK) - The Malaysian government has decided on the national minimum wage and the details will be announced by the Prime Minister.
Deputy Prime Minister Tan Sri Muhyiddin Yassin, who disclosed this, said an agreement had been reached between various parties and the Human Resources Ministry.
'We have reached an agreement with the employers, workers' unions and the ministry submitting their proposals.
'The Prime Minister will make the announcement at the appropriate time, which will be sometime soon,' he said after opening the World Kidney Day celebrations at Dataran Merdeka on Sunday.
However, Mr Muhyiddin did not elaborate if a fixed amount had been reached by the government in the National Wages Consultative Council. The tripartite body comprises employer and employee organisations and the government.
He said all relevant factors such as cost of living, inflation, demographic trends, the effects on employers and the economic impact were taken into account during deliberations.
'We believe there is basis for this (minimum wage) but we don't want to make a rash decision,' he said.
On whether the implementation of a minimum wage would see a reduction in the number of public holidays, he said that had yet to be considered.
Mr Muhyiddin said workers should enhance productivity to ensure the country remains competitive with developed nations.
It was reported that the Government was looking at a minimum wage of between RM800 and RM1,000 (between S$331.40 and S$414.20) for some 3.2 million workers in the private sector.
Close to 33 per cent of such workers are said to be earning less than RM700 a month below the income poverty line of RM763 a month.
On Friday, Human Resources Minister Datuk Seri Dr S. Subramaniam said the minimum wage policy was expected to be announced later this month.
Last month, Malaysian Employers Federation executive director Shamsuddin Bardan warned that some 200,000 small-time employers are likely to cease operations as they could not afford to pay higher salaries.
He added that the implementation of an across-the-board minimum wage would incur a production cost increase of between 30 and 40 per cent.
In Ipoh, Dr Subramaniam said the ministry was waiting for the announcement date from the Prime Minister's Office.
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