Wage floor needs relook, Chinese firms tell Putrajaya
KUALA LUMPUR, June 20 — An umbrella body representing over 28,000 Malaysian Chinese businesses told Putrajaya today that a more comprehensive study is needed before the minimum wage policy is enforced, cautioning that hasty implementation would result in business closures.
The warning from the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) today comes even as the government readies itself to formalise the controversial policy on July 1, despite fears that it would threaten up to four million jobs due to cutbacks and closures.
Tan Sri William Cheng, who is the outgoing ACCCIM president, told a function this morning attended by Prime Minister Datuk Seri Najib Razak that the wage floor should be according to sectors, instead of a blanket rate as proposed by Putrajaya.
“The ACCCIM does not object to the setting of a minimum wage to protect the welfare of employees,” Cheng explained in his speech at the body’s 66th annual general meeting here.
“However, the rate should not be set too high and implemented too hastily, which would bring negative impact to businesses and may result in the closure of businesses.
“The implementation... needs to consider the differences between different economic sectors, company locations and company sizes,” he added.
Cheng agreed that if wages were defined as a sum total of an employee’s basic salary, fixed allowance, incentive, commission and service charges, its impact on businesses would be mitigated.
But he added any wage increase without increased productivity would not be viable to employers.
“The government may have to take into consideration that minimum wage for different sectors should differ, rather than on a monthly basis,” he said.
The government’s plan to gazette the country’s first private sector minimum wage policy this July 1 will see the policy take effect in January 1 next year, well ahead of the mid-2013 deadline for Najib to hold the general election.
The Human Resources Ministry said last week it has begun training enforcement officers nationwide to ensure the base wage policy is met by employers.
“The success of the minimum wage policy depends on the compliance of the minimum wage order that will be gazetted on July 1, 2012,” the ministry had said in a written reply to a parliamentary question by DAP’s Klang MP, Charles Santiago.
The wage floor of RM900 and RM800 per month for the peninsula and east Malaysia, respectively, was announced on the eve of Labour Day by Najib, who also said employers will be given six months to meet what he called a “game-changer to transform the labour market.”
But the prime minister made a concession to “micro-enterprises,” giving them a year to comply with the requirement, permitting the inclusion of allowances or fixed cash payments when calculating a worker’s wages.
The government also tabled last Wednesday the Minimum Retirement Age Bill setting the floor age at 60 for the private sector in a move that follows the revival of studies into unemployment benefits, which may see employers bear 40 per cent of the cost.
But these moves have angered employers, especially small-medium enterprises (SME), who say that up to 80 per cent of operational companies are at risk of folding due to added labour costs from the impending introduction of the wage floor even as the global economy stutters.
SMEs, which make up 99 per cent of operational companies and employ 59 per cent of the labour force, or seven million workers, are the most labour-intensive, with 15 per cent of manufacturing costs coming from human resource.
The Malaysian Insider learnt that Putrajaya completed consultations with stakeholders at local and national levels last month for unemployment insurance, with a proposed contribution from the government and employers each doubling what employees fork out.
Several manufacturing associations told The Malaysian Insider recently they are already “cautious” and looking to “consolidate rather than expand” over the next 18 months without added pressure on their balance sheets from contributions to the jobs insurance.
Headwinds from the euro-zone crisis and a cooling Chinese economy has hit Malaysian exports, slowing growth to 4.7 per cent for the first three months of the year, the third consecutive quarterly drop since Q2 2011.