PUTRAJAYA’S plan to raise the minimum wage to RM1,500 will have a multiplier effect on the economy and derail Malaysia’s economic recovery from the Covid-19 epidemic, the Federation of Malaysian Manufacturers (FMM) said today.

Its president Soh Thian Lai said any increment in minimum wages must be done progressively and consideration must be given to all stakeholders.

“In the current circumstances of the pandemic where business conditions remain fragile for many, it must be recognised that any increase in business cost for manufacturers would have a spiralling multiplier impact on the economy and derail business and economic recovery. 

“Adjustments to wages must be done progressively and with consideration to multi-stakeholder impact,” he said in a statement.

Given that businesses have been impacted by the global supply chain, rising cost of commodities and manpower shortages stemming from Covid-19, the 25% increase in minimum wage will have an undesirable impact, Soh said.

Human Resources Minister M. Saravanan on Saturday had said the cabinet is in the midst of finalising plans to raise the minimum wage to RM1,500 by year-end, as reported by Berita Harian.

Currently, the minimum wage is set at RM1,200 per month, following a RM100 increase in February 2020.

Soh said a gradual increase to RM1, 500 with consultation with the National Wages Consultative Council is, however, welcomed, he said.

“We strongly feel that a more gradual increase in the wage rate would still be able to address the increase in the cost of living, which we are all experiencing currently as a result of the pandemic and the supply disruptions that ensued.”

Any increase in wages must also commiserate productivity levels by employees, Soh added.

FMM strongly believes that with the necessary controls on cost increases in place by the government as well as concerted efforts by the industry to defray cost increases internally, employers can continue to ensure that employment will not be affected, including being able to provide the yearly and/or contractual adjustments to wages albeit it may be minimal for most depending on business performance. 

Yesterday, the Malaysian Employers Federation (MEF) said increasing the minimum wage now is unfeasible.

Its president, Syed Hussain Syed Husman, said the move will cause more money outflows in the form of remittances, as higher minimum wage will benefit foreign workers who perform the most low-paying jobs. – February 7, 2022.