PUTRAJAYA should not raise the minimum wage until it is able to subsidise 50% of the salary increase, said the Malaysian Employers’ Federation (MEF), adding that employers are still struggling with low productivity and the dismal global economic situation.

The Wages Consultative Council revises the minimum wage every two years, with the next revision due in 2021. The government raised the minimum wage from RM1,050 to RM1,100 effective January 1 this year.

Human Resource Minister M. Kulasegaran said the minimum wage technical committee is expected to submit a new proposal by August 2020 after consulting stakeholders.

MEF chief executive Shamsuddin Bardan told The Malaysian Insight the technical committee has started discussions with stakeholders.

“The discussion has already begun. It is mainly about building a protection network for employees but not looking at the productivity of employees.”

He said while the government is committed to raising the minimum salary to RM1,500, it also promised to subsidise half of the increased amount.

“But the government says that it has no money to subsidise the increase. This situation should not happen.

“If the decision is RM1,500, but there is no allowance, it is unfair to the employer,” said Shamsuddin.

Productivity woes

The biggest challenge faced by most companies is low productivity, which means increased cost should the minimum wage be increased, said Small and Medium Enterprises Association president Michael Kang.

“The current economic situation is too bad. It is not too useful to talk about a new minimum salary in 2021. It is too early.

“It’s only reasonable to raise minimum wage after better training,” he said.

Kang said many companies would have to shut down if the higher wages don’t correspond with higher productivity, a situation which would lead to higher unemployment.

Although Malaysia’s productivity is currently ranked second in Southeast Asia, it is still lagging behind Singapore. The annual productivity of Malaysian employees is no more than RM100,000, while Singapore’s employees have already exceeded RM200,000.

Although, Singapore does not have a minimum wage, the recommended wage for office cleaners is S$1,000 (RM3,050).

“Many manufacturers are moving out of China at present, but we are not within the scope of their consideration as more prefer Vietnam. Vietnam’s growth rate is expected to surpass Singapore in 2027,” said Shamsuddin.

“At present, employers are most worried about the fact that when the government implements the new policy, it does not focus on improving productivity but it is more about increasing costs.”

Shamsuddin said workers must have access to government-funded training run by either the private or public sector to increase their skills and productivity, if the minimum wage is raised.

“There is a way to increase productivity. The main thing is to give employees abilities, including the ability to master multiple skills and perform multiple tasks at the same time.

“Employees need to upgrade their skills, while employers are adopting new technologies and combining them to enhance the overall productivity of the company.”

Malaysia-China Chamber of Commerce president Tan Yew Sing said countries need to compare their productivity with neighbouring countries if it wants to attract foreign investments.

“Malaysia needs to improve its human capital in order to attract foreign investment, so that it can stand out. The income of neighbouring countries is low and Malaysia’s income is relatively high, so it is necessary to increase productivity,” he said.

Since Pakatan Harapan took over, it has not proposed practical methods to address the high number of foreign labour, which has also contributed to a drop in productivity, Kang said.

“There are no standard operating procedures, including how to apply, which countries you can apply from, etc.

“The various departments need to be consistent. The Human Resource and Home Ministries have different standards on how many foreign workers a company can bring in.” – June 11, 2019.