Written by: Averroes
(1.0) Introduction
The government announced that the minimum wage would be RM1500, an increase of RM300 as compared to the January or February 2020 of RM1200. Though, there are hints that there are certain parties or groups that either support or oppose this move.
With the COVID-19 pandemic, life sure is hard to come by, socially and economically. The costs of living is difficult to get around.
The Prime Minister and Vice-President of UMNO, Ismail Sabri Yaakob mentioned it during his winding-up speech at the UMNO General Assembly, as the minimum wage increment would alleviate and relieve the B40 group.
Situations are getting more stable with the removal of certain restrictions and the enablement of some laxity. Businesses are beginning to convalesce and that income are slowly spurring back for whom who had lost their jobs.
To better aid people in need, on the 1st of May 2022, the new minimum wage would be enforced and it is hoped that it would pave a new hope for those struggling.
(2.0) Effects of minimum?
According to the International Trade Union Network Council Malaysia, it was stated that the minimum wage is only capped for private sector companies with five employees. Also, the date on 1st May, could potentially be undermined, as the government could be pressured to postpone it further.
This may actually happen, as the government through the Deputy Human Resources Minister Datuk Awang Hashim told that, 'deferment' is in discussion and will be publicised after the implementation. Deferment is made to discern upon which employers could defer it and how many employees which is eligible for it.
Therefore, the minimum wages should be applied to all sectors.
Contrarily, the Malaysian Employers Federation (MEF) said that the minimum wage increase is premature as employers would experience ramifications. Among which, the price or costs of doing business would also bear more weight for them to handle.
Therefore, MEF suggests that the minimum wage should be done in stages, rather than a instant 25-36% increase. A deferment is likely, especially for micro, small and medium enterprises (MSMEs), as to allow them to get back on business track.
These includes hotels, tourism and service sectors as they are taking up the toll from the impacts of the pandemic. If not, they (employers) will get knocked out of businesses fast and are in the pursuits to survive with too much costs to handle.
They have already lost skilled workers, coping with limited resources and that the increase of wage, will also increase the costs of their services to customers who would be discouraged. Hence, it would cause inflation in a way.
The most pressing issue for them is that, the actually benefiter of the increase are foreign workers. There are two scenarios. One, they receive higher wages and remit them back to their home countries instead of contributing it back to Malaysia.
Second, they will lose their jobs, since their employers could no longer afford to pay them. This is because, most of the workers in the lower levels are actually foreigners.
The Federation of Malaysian Manufacturers (FMM), citing the findings of FMM-MIER Business Conditions Survey for the second half of 2021, the respondents believed that RM100 increase for minimum wages is acceptable, given the economic trends and done gradually for years 2022 to 2024 to reach RM1,500.
(3.0) What law ought to be changed
The relevant laws for minimum wages is found as under the Employment Act 1955. However, more specifically, it is under section 23(1) and (2) of the National Wages Consultative Council Act 2011.
The government will agree with the National Wages Consultative Council when latter advise and recommend the government, through the Minister responsible to revise Minimum Wages Order.
As of now, since we have no access to the Minimum Wages Order 2022 yet, we still do have the 2020 version of RM1200 and RM1100. The Minimum Wages Order 2020, effective on 1st February 2020 stipulates the City Council and Municipal Council areas, employees will receive wages of RM1200.
However, areas which are not, will receive RM1100. The schedule or timetable for that may be found here. As stated before, the new minimum wage as told by the government applies to all private sectors with at least 5 employees and not based on City or Municipal Areas.
We have yet to see any deferment or further clarification on this, hence we would have to wait and see the enforcement of the new 2022 law.
(4.0) References;
Jananey Ramachandran (March, 2022) RM1,500 new minimum wage should apply to all sectors, says union. Retrieved from, https://www.freemalaysiatoday.com/category/nation/2022/03/20/rm1500-new-minimum-wage-should-apply-to-all-sectors-says-union/
Keertan Ayamany (March, 2022) Report: Govt may defer RM1,500 minimum wage ruling for SMEs, micro businesses. Retrieved from, https://www.malaymail.com/news/malaysia/2022/03/21/report-govt-may-defer-rm1500-minimum-wage-ruling-for-smes-micro-businesses/2048575
Dheesegaan Bala Krishnan (March, 2022) Announcement on minimum wage 'premature', says MEF. Retrieved from, https://www.nst.com.my/news/nation/2022/03/781809/announcement-minimum-wage-premature-says-mef
Azalea Azuar (March, 2022) Increasing minimum wage not holistic solution, industry players say. Retrieved from, https://themalaysianreserve.com/2022/03/21/increasing-minimum-wage-not-holistic-solution-industry-players-say/
Nor Ain Mohamed Radhi (February, 2022) Minimum wage increase will only benefit foreign workers, says MEF. Retrieved from, Minimum wage increase will only benefit foreign workers, says MEF
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