Malaysia

Minimum wage for security guards may cause layoffs, says MEF

KUALA LUMPUR, Jan 15 — The Malaysian Employers Federation (MEF) has warned that security guards may be sacked because of the newly-implemented minimum wage policy for security workers. 

This week, Labour Department director-general Datuk Sheikh Yahya Sheikh Mohammed said more than 100,000 security guards nationwide are to be paid a salary of at least RM700 this month as the policy was implemented on January 1. 

“Possibly, one of the ways for security companies to bear the costs is to reduce their staffing,” Shamsuddin told The Malaysian Insider earlier this week. 

“But if they reduce staffing, customers will complain. It is going to be very hard for companies to survive. If they are not able to offset the costs, they may quit the business to prevent the possibility of being sued by customers,” he added. 

Shamsuddin pointed out that security companies could not transfer the higher costs to their customers due to existing contracts. 

“Normally, contracts are meant for long periods, such as two to three years, before they can ask for a review. So, they are not able to pass on this new cost partly to consumers or customers,” said Shamsuddin. 

Under the new wage scheme, Shamsuddin said the security guards’ monthly take home salary could range between RM1,100 and RM1,400. 

He also said MEF members have complained that some security companies have doubled their charges. 

“Six months is not enough time to renegotiate contracts,” said Shamsuddin. 

“Customers will say ‘you have agreed with me. It’s not my problem, it’s your problem’,” he added. 

Last October, Prime Minister Datuk Seri Najib Razak said during the tabling of Budget 2011 that security guards would be given a minimum monthly salary of between RM500 and RM700 effective January 2011, depending on location. 

The minimum wage policy for security guards was scheduled for July 2010, but was postponed as the Security Services Association of Malaysia (SSAM) said a July implementation would cause 300 Bumiputra security companies to fold. 

Today, Shamsuddin said the minimum wage has unexpectedly sparked competition as service companies were now forced to remain profitable despite higher costs. 

“This is like survival of the fittest,” said Shamsuddin. “If you are not competitive enough, you’ll have to ship out. This is not the intention, but the consequence of the (government)’s action,” he added. 

Shamsuddin also pointed out that the minimum wage policy, which its proponents say is aimed at improving living standards, would likely backfire instead. 

“They (security guards) will be out of a job...because of the inability of employers to bear costs. We don’t even have wages to talk of then,” said Shamsuddin. 

He added that the newly-enforced minimum wage policy for security guards would serve as a “good case study” before the planned implementation of a national minimum wage. 

“If this doesn’t work, what more on a national basis?” asked Shamsuddin. 

Last November, Deputy Prime Minister Tan Sri Muhyiddin Yassin said the formation of the National Wage Consultative Council (NWCC) would be sped up. 

The Najib administration has targeted 2011 to implement a minimum wage policy, but has faced resistance from employers who worry it will hamper business. 

Employers argue that only low-skill, low-income foreign workers will benefit from a minimum wage and propose that the government increase employee productivity instead to lift Malaysia out of its middle-income trap. 

Human Resource Minister Datuk Dr S. Subramaniam, however, has countered that the minimum wage policy was necessary as the salary structure in many sectors had not changed much over the years. 

The Malaysian Trades Union Congress has called for a RM900 minimum wage to be set across the board plus a RM300 living allowance to help those earning below the poverty line of RM720 a month. 

Last August, the Human Resources Ministry said more than 30 per cent of the country’s 1.3 million workers were earning less than RM700 per month.

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