PUTRAJAYA’S plan to raise the minimum wage to RM1,500 is unfeasible for most local businesses, which are still reeling from the Covid-19 pandemic, said the Malaysian Employers Federation (MEF).

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.

“Instead, effort should be directed towards business recovery in the private sector and controlling the rising costs of products and services.

“We must remember that 98.9% of local businesses are micro, small and medium enterprises. So when we talk about costs and wages, we must think of their survival and sustainability.

“Even a small increase in cost will cause closures and suffering, what more an increase of RM300 to RM400 per month on top of existing national minimum wages.”

Human Resources Minister M. Saravanan yesterday 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.

Syed Hussain said higher minimum wage will cause companies to drive up the costs of goods, services and operations, all of which will be passed to consumers.

Companies that cannot cope with debts due to these higher costs will close, which will cause more unemployment, he added.

He said as most local workers are paid a more than RM1,500 salary a month, the bid will end up benefitting foreign workers and increase money outflow.

“It is estimated that foreign workers, on average, send back an additional RM4 billion each year for every RM100 hike in minimum wage.

“Thus, the increase of RM300 to RM400 will cause an additional outflow of between RM12 billion and RM14 billion each year.

“It is estimated that legal foreign workers remit about RM34 billion to source countries via official channels a year. The amount of remittances will double if we take into account that they are done via unofficial channels.”

If the government is serious about reducing dependence on foreign labour, Syed Hussain said MEF proposes the income of low-earning Malaysians to be improved through other ways, such as raising the status of dirty, dangerous and difficult (3D) jobs.

These jobs can be rebranded and incentivised by using better technology and mechanisation, and requiring workers to be retrained and reskilled to utilise the new technology, he added.

He also said employees’ wages should be linked to certified skills as “trained and skilled workers are expected to yield higher productivity, and market demand will push employers to reward these workers with higher wage.”

“With certified skills and higher wages, locals will be attracted to perform rebranded 3D jobs. Any negative stigma perceived by society in relation to 3D jobs will be removed by the rebranding, which must be supplemented with a clear career progression plan.

“This scenario is common in developed countries, such as Japan and the United Kingdom, where locals take pride in performing such jobs.” – February 6, 2022.