MEF: Minimum wage hike does not address high living cost issue

PETALING JAYA (Oct 23): The Malaysian Employers Federation (MEF) said the government's move to increase the minimum wage in major cities took the organisation by surprise as there was no consultation with the relevant stakeholders.

MEF president Tan Sri Azman Shah Haron also claimed that the increase has "very serious ramifications" on the cost of doing business in Malaysia, which will result in the compounding of the cost of living issue.

"The minimum wage was reviewed in Budget 2019 from RM1,050 to RM1,100 and now in Budget 2020, the government is looking to increase it to RM1,200 in big cities. This would not solve the problem of high cost of living but will instead compound the problem," Azman said at a press conference today.

He said the higher minimum wage will largely benefit foreign workers as "not many Malaysians are earning minimum wage". According to him, the increase will in fact burden Malaysians as this will result in higher prices of goods and services.

The move will have a limited effect on the economy, said Azman, as foreigners will be remitting their wages back to their home countries.

"It's now obvious that the finance minister prefers his own personal judgment in setting the minimum wages while choosing to ignore the views and recommendations of the experts in the National Wages Consultative Council once again," said Azman, adding that the minimum wage should be reviewed every two years as previously planned.

MEF proposed several alternatives that the government should consider in lieu of raising wages, such as providing RM250 via a "BR1M-like" subsidy payment to assist Malaysians to cope with the increase in the cost of living, which also ensures that the money will not leave the country.

Azman said this would also be in line with Pakatan Harapan's manifesto, which states that the government would share 50% of the costs involved in increasing the minimum wage to the targeted RM1,500, to reduce the burden on employers.

Besides that, MEF suggested the amendment of the definition of minimum wages from the current basic wages to gross wages, which includes overtime and other benefits received, so that it encourages productivity growth.

The federation also expressed its disapproval of the announcement of the extension of maternity leave from 60 to 90 days and the expansion of overtime eligibility from those earning less than RM2,000 to those earning less than RM4,000.

On the extension of maternity leave, MEF said the government should also share the responsibility, as practised in some neighbouring countries and developed economies.

"It is not fair to push the entire cost of maternity leave on employers, who would also have to bear additional cost of securing replacement for the employee on maternity leave," said Azman.

On the expansion of the scope of overtime eligibility, he said employees earning RM2,000 and below should still continue to be entitled to 1.5 times overtime rates but those earning between RM2,000 and RM4,000 should be paid at a rate of 1.0 times.

"The industry group is perplexed and taken aback by such a turn of events. These announcements have indeed very serious ramifications on the cost of doing business and industrial relations.

"With such high cost increases to doing business, it will be difficult for Malaysia to retain and attract investments," said Azman.

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