The Malaysian Insight

PUTRAJAYA’S announcement that the minimum wage would be raised to RM1,050 from January onwards has earned it criticism from pro-reform lawmakers for being too far short of the promised RM1,500.

At the same time, industry players condemned the Pakatan Harapan government for raising the amount prematurely as the country faced economic uncertainty, claiming the new wages would mostly benefit foreign workers and not locals.

Klang MP and DAP lawmaker Charles Santiago called the hike an “insult” to the 15-million-strong labour force in Malaysia and did not take into account the rise in prices of goods and services.

Malaysia began implementing minimum wage in January 2013, with the rate first set at RM900 for the peninsula and RM800 for Sabah and Sarawak. The rate was revised to RM1,000 and RM920, respectively, in July 2016.    

The new RM1,050 rate will be standardised for all workers nationwide next year.

Santiago said that the PH election manifesto had stated that the minimum wage would be increased to RM1,500 within the next five years, but with a mere RM50 raise this time, it was unlikely that pledge would be fulfilled.

He said that productivity growth had outpaced wage growth since the 1970s, and that a RM1,500 minimum wage would help the country achieve 40% share by 2020.

He said a new wage structure was crucial in addressing rising urban poverty.

“These poor families will face greater misery if the new wage structure is not in favour of workers,” he said.

Petaling Jaya MP and PKR lawmaker Maria Chin Abdullah said the government must review the wage hike, and take into consideration Bank Negara’s 2017 annual report stating that the expenditure of the bottom 40% (B40) of Malaysian households had expanded at a faster pace compared with their income.

She also cited the Malaysia Economic Monitor report released last year by the World Bank stating that the inflation rate in Malaysia had outpaced wage increases, with poor urban households most affected.

“Every citizen is entitled to a fair wage to allow us a decent living,” said Chin.

“Should we achieve industrialised-nation status, we must work to ensure that no one gets left behind and everyone’s access to basic needs is not hindered.”

Standardising minimum wage was one of 10 promises Pakatan Harapan promised to fulfil within 100 days in power. Pakatan also promised to revise the rate every two years and to share the cost with employers. 

However, SME Association of Malaysia president Kang Hua Keong said Putrajaya should have waited for the economy to improve before adjusting the rate.

“The Human Resources Ministry told businesses they would revise the rate to RM1,200 in 2020.

“Ministers said the government was on an austerity drive. We don’t understand why they didn’t wait until the economy improved and the national debt was reduced (to come up) with a clearer foreign worker policy and better minimum wage regulations,” he told The Malaysian Insight.

He said the January revision would create a more challenging business environment as it could trigger inflation, adding that employers were already dealing with a depreciating ringgit against the US dollar and adapting to the sales and services tax.

Kang also said only about 10,000 local workers would benefit from the hike.

“Most locals earn a monthly wage of more than RM1,200, so the biggest beneficiaries would be foreign workers,” he said.

Employers also have to bear lodging cost when hiring foreign workers, Kang said in hoping that the government would allow small and medium enterprises to claim more tax relief to offset such costs.

Employers are not allowed to deduct foreign workers’ levy, lodging costs or allowances from the workers’ minimum wage. 

The Malaysian Employers Federation had insisted that the minimum wage only be increased with a raise in labour productivity. – September 6, 2018.