Bosses worry over impact of wage hike
KUCHING: The response from local employers regarding the implementation of the RM1,200 minimum wage has been unenthusiastic, to say the least.
Charles Liew, the founder and chief executive officer of SHiNE Pharmacy, says on the positive side, the policy translates into more money getting into the hands of employees who, in turn, would pump it back into the economy via consumer spending.
Elaborating, he says increased spending will have a ‘roll-on’, or ‘multiplier’ effect, which will then fuel the local economy and make it become more robust.
This, however, looks good on paper – Liew also has reservations when it comes to the notion of employees having more money would equate with having better quality of life.
He says due to the increase in minimum wage, local businesses that are on the periphery of insolvency may decide to work with what they currently have and freeze the hiring of new employees – directly affecting job-seekers and new graduates.
“Even worse, some employers may even be forced to make certain positions redundant – in other words, they have to lay off some employees in order to stay afloat.
“Why? Because the increase in minimum wage does not happen in isolation. An increase in wage at the very bottom would inadvertently cause pressure higher up the pay ladder, pushing salaries to go up across the board in an organisation, from bottom to top.
“Also, for companies struggling to cope with increased wages, they may have little choices other than to pass on the increased costs to consumers; this would result in what’s typically known as an increase cost of living! And guess what? This perpetuates an environment whereby minimum wage would constantly need to go up – an undesirable cycle,” Liew told thesundaypost.
He believed that the prudent approach would be to see how the implementation of RM1,200 minimum wage would go.
Meanwhile, Liansin Trading Sdn Bhd senior marketing manager Lim Boo Khiong said the minimum wage hike would not make much difference in the company, in that the majority of Liansin staff were paid more than RM1,200, and they had been with the company for ‘a long time’.
Only a few were paid less than the minimum wage, he said, due to them being newly employed.
“But their wages will be increased to (a minimum of
RM1,200) in compliance with the directive,” he said.
The implementation of the RM1,200 minimum wage would take effect this Jan 1.
Still on Liansin, Lim said the packaging of the rice was being done using machines; thus, reducing the need for manpower.
For a local businessman, he said the minimum wage hike could spell the end of many small businesses, due to them having to incur more costs.
“The economy is not very good now. Expenses are at alltime high, and to pay that much (RM1,200 per worker) means that the bosses themselves end up getting less than the employees,” said the businessman, who requested to remain anonymous.
“For example – how many bowls does a ‘kolo mee’ stall owner need to sell to earn enough to pay a helper? Should there be very few customers that day, he would still have to pay a fixed rate to his worker – he might end up getting less than his worker.
“If he increased the price, then he would get even less customers; at the end of the day, it’s not worth running a business when it would end up being closed for good.”
Moreover, the businessman pointed out that with Malaysia having many public holidays, the employers would have to give double-pay if they wanted their workers to work on those days.
“The only ones that won’t get affected are those in the niche markets, or big companies like Starbucks – they can still do well and pay the higher minimum wage,” said the businessman.
In a Bernama report on
Wednesday, the government via the Human Resources Ministry decided to raise the minimum monthly wage to RM1,200 in major towns under 57 city and municipality councils, while the minimum wage would remain at RM1,100 a month for the rest of the country.
With the order to be gazetted soon, the new minimum wage would apply to all workers in the private sector, except those in the domestic service, as stipulated under the Minimum Wages Order 2018.
Details on the minimum wage according to hours and days as well as workers being paid according to piece rates, trips, commissions, tonnes and tasks, would be provided under the new minimum wage.
The Human Resources Ministry said the minimum wage rate would continue to be reviewed to ensure that it would remain in line with current needs and with the objective of achieving a minimum wage of RM1,500 a month in the first five years of Pakatan Harapan’s federal administration.