MEF: Upward Revision Of Minimum Wages May Derail Malaysia’s Economic Recovery
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(Image: Malay Mail/Firdaus Latif)

The Malaysian Employers Federation (MEF) has commented that employers are currently incapable of absorbing any increase in wage costs, especially as the country begins to recover from the onslaught of the Covid-19 pandemic. Additionally, any upward revision of minimum wages would disrupt the nation’s progress, on top of the 12th Malaysia Plan (12MP).

According to the president of MEF, Datuk Dr Syed Hussain Syed Husman, all economic sectors had suffered a massive dip in performance following the pandemic. This, in turn, caused Malaysia’s economy to contract by 5% in 2020. Consequently, Malaysia also saw a drop in its mean monthly salaries, as well as a worsening case of unemployment. Specifically, the median wages in Malaysia dropped from RM2,442 in 2019 to RM1,988 in 2020 as employers took steps to save cost. The average wages, meanwhile, fell by 9% – from RM3,224 in 2019 to RM2,933 in 2020.

Datuk Syed Hussain further noted that more than 32,500 companies had ceased operations with more than 107,000 employees losing their jobs following the lockdowns that were imposed in 2020 and 2021. “This resulted in higher unemployment rate which in August 2021 recorded 4%,” he said, adding that Malaysia’s unemployment rate prior to the pandemic outbreak (at full employment) had stood at less than 4%.

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(Image: Malay Mail/Choo Choy May)

In light of this situation, Datuk Syed Hussain opined that any upward reviews of the existing minimum wages should not be in the cards, especially when more than 98% of registered companies in Malaysia are small and medium enterprises (SMEs) and micro enterprises (MSMEs). “Instead of increasing minimum wage, we are of the view that efforts should be put in place to urgently control the rising cost of products and services. No amount of wage increases will be able to keep up with the ever increasing cost of living if no effective measures are implemented to solve the issue of rising cost of living,” he said.

Datuk Syed Hussain also stressed that these businesses require more government support to help them retain existing employees, which could then stabilise the labour market and create better employment opportunities in the long run. He said that although the government had provided wage subsidies amounting to RM18 billion throughout 2020 and 2021 – which benefitted more than 300,000 employers and 2.4 million employees – many businesses are still struggling to remain sustainable.

“More is needed and we must do all we can to support existing business at this very critical juncture. Our top priority should be to provide more funding for businesses that were forced to shut down so that we are able to create employment for all those who lost their jobs during the lockdowns,” said Datuk Syed Hussain, adding that Malaysia will need at least two years to return to normal.

On top of that, Datuk Syed Hussain shared that most SMEs are now only able to reap a margin of between 10% to 15%, which is insufficient to even cover overhead costs. “To add to the cost of business now is unwise,” he emphasised, saying that the nation needs to take a balanced approach and be realistic when dealing with wage issues at this juncture.

Earlier this month, senator Dr Yaakob Sapari had suggested for the government to review the country’s minimum salary increase as it does not match the rising cost of living. Malaysia’s minimum wage currently stands at RM1,200 after a raise of RM100 in February 2020.

(Source: Malay Mail)

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