‘Higher minimum wages will impede economic recovery’
Both the Malaysian Employers Federation (MEF) and the Malayan Agricultural Producers Association (MAPA) spoke against the recent calls to review the national minimum wages, citing it ‘untimely and outrageous’ the present predicament brought about by Covid-19.
KUCHING: Both the Malaysian Employers Federation (MEF) and the Malayan Agricultural Producers Association ( MAPA) spoke against the recent calls to review the national minimum wages, citing it ‘ untimely and outrageous’ n the present predicament brought about by Covid-19.
According to MEF executive director Datuk Shamsuddin Bardan and MAPA director Mohammad Audong in a statement, this was in spite of it being a mere six months since the minimum wages were revised to RM 1,200 for 16 city council areas and 40 municipal council areas.
“Besides the increases in the cost of doing business, the RM1,200 minimum wages in 16 city council areas and 40 municipal council areas also caused distress and anxiety among the employers and employees as the demarcation of geographical boundaries was unclear, and also discriminatory,” they highlighted.
“For example, the palm oil industry faced major problems as certain estates were located within the 16 city council areas and 40 municipal council areas.
“Such estates would be subjected to a lot of scrutiny by the RSPO and MSPO in terms of alleged discriminatory practices.
“This also triggers unnecessary trade disputes with the trade unions and employees. Similarly, the wages paid for the same job would differ across borders and this would seem to be most unfair to the employees as well as the employers.”
Notably, the RM1,200 minimum wage for 57 cities and bigger towns was gazetted on February 1, 2020, just over a month before Malaysia declared the Movement Control Order (MCO) on March 18, 2020.
The drastic measures to control the spread of the Covid19 – with the implementation of the MCO, and the subsequent Conditional MCO (CMCO) and Recovery MCO ( RMCO) – had basically decimated our economy.
“The sluggish global economy and high number of retrenchments across the country showed that any further wage increases would be manifestly ill-judged with employers being made to bear increases in the cost of doing business, which would then be reflected by the high number of retrenchments,” they cited.
“Be that as it may, as far as private sector employment is concerned, very few employers were hiring and most were considering undertaking retrenchment exercises instead.”
Among the cost- cutting measures being taken by employers to retain their employees include employment freeze, instituting unpaid leave, removal of some noncontractual allowances and benefits, utilisation of annual leave, reduction of work days and hours, and reduction in some benefits agreed in the collective agreement (for unionised companies).
Any increases in minimum wages would only benefit foreign workers who officially repatriate about RM34 billion annually. If remittances through unofficial channels are taken into account, the amount of remittances by foreign workers will be doubled of the official remittances.
MEF and MAPA are of the position that higher minimum wages will impede Malaysia’s economic recovery.
Instead of raising minimum wages, government policies should focus on recovery of Malaysia’s economy through retention of employees, creating more jobs, improving productivity and enhance competitiveness.
The right policies are needed to encourage job creation with companies able to hire more locals and thus curbing rising unemployment.
MEF and MAPA also said the foreign workers levy as paid by the employers should not be treated as government’s revenue and should be ploughed back to the industries for automation, mechanisation and to upskill and reskill local employees.
“For many years, even prior to the Covid-19 landscape, MEF, MAPA and other industry associations had called on the government to channel the foreign workers levy paid by employers for such purposes, as well as for the development and training of local workers.
“However, the foreign worker levy collected continues to be channelled into the government’s main coffers up till now.”