THE new minimum wage effective May 1 will have little to no bearing on employers and employees in urban areas, business owners said.

They told The Malaysian Insight most workers in small- and medium-size enterprises and the food and beverage industry already make more than RM1,500 a month.

Others, however, said for the low income B40 group, the new minimum wage is barely enough for them to survive taking into account the current inflation rate.

Restaurant and Bistro Owners Association vice-president Jeremy Lim said most of the group’s members were already paying more than the new minimum wage.

“The bulk of our members are in urban city centres. The restaurants, bistro and clubs have long ago surpassed the RM1,500 minimum wage,” Lim said.

“In urban areas, it is hard to survive on less than RM1,500.”

Lim said a barista typically earned around RM1,600.

“If they have experience and are able to do coffee art, the pay goes up drastically.

“For waiters, they are paid a starting salary of at least RM1,500 to RM1,600, not inclusive of tips. Upon confirmation and with tips, they will earn more than RM2,000.”

Businesses in rural areas, however, could suffer from the 25% increase in minimum wage, Lim said.

“This will push up the cost of doing business, especially for those in rural and suburban areas. They may not be able to cope with high overheads and low returns.”

This, Lim said, may lead to businesses increasing the prices of goods.

“The government is giving more money to the B40 but the prices of everything are increasing in nd the middle-income people are going to fall into the low-income group.”

The government should have done more groundwork before announcing the new rate, he said.

“I believe the government should have studied it more thoroughly before making the sudden announcement.

“We need to do what we need to do to become a high-income nation but studies must be done before we make policy changes.”

He said small and micro businesses are allowed to postpone the implementation as they may not have the ability to pay.

The current minimum wage of RM1,200 was introduced in February 2020.

SME Association national vice president Chin Chee Seong also agreed with Lee that the new minimum wage will have minimal impact.

“For the retail and F&B sector in major cities, a lot of the workers are paid more than RM2,000.

“Cafes and restaurants even can’t get people to work for them with a minimum salary of RM2,500,” Chin said.

Chin said SMEs will also not be severely impacted by the new minimum wage.

“It was expected. It will have an effect on the cost of doing business for some, but it won’t affect many because it applies only to SMEs which have more than five workers.

“To achieve a high-income nation status by 2025, this is part of the plan and requirement to move forward.”

Barely enough to survive

S. Ganesan, a research officer at the Consumer’s Association of Penang, said for the B40 group, the new minimum wage was still insufficient.

“We welcome it, but it breaks down to just about RM8 or RM8.50 an hour.

“Even foreign workers won’t work for less than RM70 or RM80 a day. Compared with our factory workers, RM1,500 is just a subsistence salary,” he said.

Faced with the rising prices of goods due to the pandemic, global supply issues and the war in Ukraine, the low-income group barely have enough to buy food or pay for education, he added.

“Education, food, transport costs have all gone up. But at least they are earning a little more than before.”

Ganesan said the new minimum wage was also unlikely to encourage gig workers to join the workforce.

“Gig workers are earning more than this and they can earn a lot more if they work hard. They would rather remain where they are than work at factories.”

The consumer price index rose 2.2% to 125.2 in February 2022, compared with 122.5 for the same period last year.

The inflation was driven by rising prices of food. – March 28, 2022.