PUTRAJAYA should have not imposed the increased minimum wage at one go but instead implement it in stages, employers and industry players said.

They told The Malaysian Insight this is because many small and medium enterprises are not financially ready as prices of goods globally are increasing. 

Prime Minister Ismail Sabri Yaakob on March 19 announced that the government had agreed to increase the minimum wage from RM1,200 a month to RM1,500 a month from May 1. 

But Ding Hong Sing, president of the SME Association of Malaysia, said the RM300 increase per worker is problematic for SMEs, many of which have yet to recover from the effects of Covid-19 pandemic.

Ding said his association together with other business groups recently met with the Human Resources ministry to voice their concerns.

“For RM1,500 minimum salary, many of us are still not ready. There are about 1.15 million SMEs nationwide and the majority have given us their feedback that they are not ready.

“This is because the prices of goods are increasing, and the war between Russia and Ukraine is not helping, and causes more economic problems.

“We told the ministry that if they want to increase the minimum wage, to do it in stages, for example, RM150 per year until it reaches RM1,500.

“Slowly but surely, and don’t impose it drastically,” said Ding.

The cut into companies’ profit margins as a result of the higher wage is about 30%, he added.

On Friday, the new minimum wage of RM1,500 effective May 1 was officially gazetted.

The Minimum Wages Order issued by Human Resources Minister M. Saravanan was published in the Federal Government Gazette and uploaded on the official website of the Attorney-General’s Chambers.

According to the gazette under paragraph 4(1), an employee who is not paid basic wages but is paid based on piece rate, tonnage, task, trip or commission, the monthly wage rate payable to the employee with effect from May 1, 2022 shall not be less than RM1,500.

In addition the gazette states that the minimum wage of RM1,500 on May 1 is exempted for an employer who employs less than five employees and the implementation will only take effect on January 1, 2023.

Mydin managing director Ameer Ali Mydin advised industry players to bite the bullet and stop complaining.

Ameer admitted that the amount of increase was drastic and said it could have been imposed gradually.

“To say one is not ready may not be accurate because the announcement by Putrajaya was made earlier.

“However, to say one is not capable of following the policy may be correct.

“The increase is drastic, from RM1,200 to RM1,500. It should have been done slowly from RM1,200 to RM1,350 then RM1,400 until RM1,500.

“It will give companies time to adjust. The cost of living is high, prices of goods are also on the rise, we have no choice but to adapt.

“I think we need to bite the bullet and hopefully productivity will increase,” said the retail giant owner.

For Mydin, Ameer said the new minimum wage policy will see the company pay a total of RM25 million per year in wages to all of their employees.

“I cannot just increase those with RM1,200 in salary. Those with RM1,500 also need a raise to RM1,700. Those with RM1,800 up to RM2,000.

“It is a lot for us but we need to support the policy,” said Ameer.

The previous minimum wage of RM1,200 was implemented on February 1, 2020.

The new figure of RM1,500 had been the amount promised by Pakatan Harapan which won the 2018 general election. It was however, unable to implement it as its stint in power was cut short by the Sheraton Move in February 2020.

Johor Kitchen Association president, Ang Siew Keong however said the new wage policy would not be much of a problem for restaurant owners.

He said as the country is moving towards the endemic phase, restaurants are slowly recovering.

“People can now dine in, operating hours are now longer, food delivery services are booming therefore, many restaurant owners or kitchens are able to make profit.

“Unlike during the two years of the pandemic where many were not able to operate and only relied on food delivery services.

“The minimum wage is fair for restaurant owners but I don’t think other sectors would agree with me. They are still recuperating.”

In 2021, an estimated 37,415 micro-SMEs closed down, affecting 172,200 employees.

Data from the Companies Commission of Malaysia showed 4,507 new companies were registered in November, 4,195 in October, and 4,367 in September. – May 2, 2022.