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Minimum wage hike draws industry criticism

Minimum wage hike draws industry criticism

The minimum wage in Malaysia is to rise to RM1,500 a month ($355) and will be implemented nationwide for most companies from 1 May, Prime Minister Ismail Sabri Yaakob has confirmed.

Initially, the new minimum wage will apply to bigger firms and government-linked companies, he said, adding that micro companies with just a few employees are likely to be exempt.

The minimum wage was last revised on February 1, 2020. It was increased by RM100 to RM1,200 during the tabling of Budget 2020.

However, some Malaysian industries are protesting against the new national minimum wage, warning companies could lose competitive edge as well as suffer higher costs and a hit to their business recovery.

The Malaysian Semiconductor Industry Association described the increase as “too much too soon”, saying that companies did not have enough time to adjust wage structures and make productivity improvements to stay competitive.

It warned that the pay increases come at a time of rising raw material and commodity prices, as well as labour shortages, that were already adding to cost pressure. The Association urged the government to consider a gradual wage increase over three years instead.

Malaysia is a key manufacturer of chips, accounting for more than a tenth of a global trade worth over $20 billion.

 

Derailing business recovery

The Federation of Malaysian Manufacturers (FMM), which represents over 11,300 companies, said the wage hike would affect its members’ payroll costs and potentially derail business and economic recovery.

“Such a steep increase would have an undesirable impact on their business recovery,” said FMM President Soh Thian Lai. He added that foreign workers would also have to be paid the new minimum wage.

Malaysia, a key manufacturing hub that relies heavily on migrant workers in factories and plantations, has seen its companies come under scrutiny from allegations of forced labour practices that include unpaid wages, Reuters has reported.

It said officials have acknowledged excessive overtime hours, unpaid wages, lack of rest days and unhygienic dormitories which analysts and consultants have said needed to be addressed or the country risked losses in its export-reliant economy.

 

Covid fines proposal scrapped

Prime Minister Ismail Sabri has also announced that plans to raise the level of fines for people breaking Covid-19 rules (the standard operating procedures) would no longer be tabled in Parliament.

He said: “[Under] Act 342 on control of infectious diseases, the [proposed] RM10,000 fine for individuals breaching the SOPs and RM50,000 for companies will not be brought to Parliament. The old Act will stay, with the fine maintained at RM1,000.”