THE government is not ruling out the possibility that the implementation of the RM1,500 minimum wage for all sectors, including companies with fewer than five workers, could lead to an increase in the inflation rate, Economy Minister Rafizi Ramli said.

However, he said, the government had carried out the necessary assessment on the matter before deciding to implement it.

“The enforcement of the minimum wage order comes with a risk (of inflation), but we (the government) always make sure that the increase in the wage rate strikes a balance between salaries and the cost of living. That’s our focus,” he said in Putrajaya today.

“The nature of the economy is such that there is always inflation. We hope to keep inflation at a healthy level of around 2%.”

The minimum wage order was gazetted on April 27 last year, for implementation from May 1, 2022. However, companies with fewer than five workers were exempted from the rule until the beginning of this month.

Rafizi said the country’s inflation rate in May continued to decline to 2.8%, from 3.3% in April, marking it a nine-month consecutive decrease.

“What’s important is that inflation can be absorbed by a wage increase that is commensurate with the value of work and the increase in the prices of goods,” he said.

Rafizi said the enforcement of the minimum wage order could also ensure that people’s income increases periodically in tandem with the rising cost of living. – Bernama, July 4, 2023.