Business federation: Minimum wage should be regionalised, sectorial

  Date Posted: 07 Jan 2019, Monday

KUCHING: The new minimum wage of RM1,100 should be regionalised and sectorial in view of the varying costs of living in different areas and different levels of expectations from employees in different sectors of employment.

This proposal came from Sarawak Business Federation (SBF) secretary general Jonathan Chai, who pointed out that one could not compare an administrative staff with a factory worker.

“The Minister of Human Resources YB M Kulasegaran pledged to look into these issues during his recent visit to Sarawak.

“It is hoped that the ministry will ensure that Sarawak government and all stakeholders would be duly consulted before any further revision of the minimum wage,” he said when contacted here yesterday.

From Jan 1, the minimum wage is RM1,100 across Malaysia. Prior to this, the minimum wage was RM1,000 in Peninsular Malaysia and RM920 in Sarawak and Sabah.

Chai said they also hoped that a representative from SBF would be appointed to the National Wage Council to ensure adequate representation of the business sector from Sarawak.

“This is so that the views of our local business community could be effectively channelled. Personally, I think what worries most the local businesses is the plan of our (federal) government to further revise the minimum wage rate to RM1,500 eventually as pledged by the PH (Pakatan Harapan) in its election manifesto in GE14 (14th general election).”

He opined that there should not be any further drastic change in the minimum wage at least for the next couple of years in anticipation of the challenging and deteriorating economy.

The minimum wage of RM1,100 “is definitely taxing on most SMEs (small and medium enterprises) in Sarawak especially those traditional retail businesses like sundry and coffee shops”, he pointed out.

“The spiral effect of inflationary pressure on the price of goods due to such revised rate of minimum wage is expected, as to what extent remains to be seen.

“Honestly, I cannot see the rationale for standardising the minimum wage for the whole country given the fact that we have varying standards of costs of living in different parts of the country,” he explained.

As an example, he said the purchasing power of RM1,100 in Klang Valley was definitely incomparable with that of most small towns in East Malaysia.

He felt that the revised minimum wage would affect the businesses in places like the Klang Valley, Selangor, Penang and Johor as their standard of living is comparatively higher and labour markets in those areas are vibrant.

“But such revised rate would however hit hard on the business sector in East Malaysia. I think the government should consider the relatively more expensive materials for the manufacturers here, after taking into account the transportation costs the standardised minimum wage will make the products from Sarawak less competitive.

“The revised minimum wage will impact the SMEs and the traditional family-run businesses, in particular those in the rural areas,” he said.

Chai believes that the new minimum wage rate would also dampen the employment opportunities of job seekers.

He said employers would be slow in getting additional staff as the new minimum wage had increased the cost of business operation especially under the prevailing deteriorating economy.

Those big corporations with ample resources would probably expedite their automated process of production in order to cut costs in the long run, he said.

“Looking at the new policy from a more positive perspective, it’s time for our local businesses to capitalise on the incentives totalling RM210 million as provided by the government in the 2019 Budget to upgrade their business operation in the Industry 4.0 transition so that they could remain relevant and competitive in the wave of globalisation process,” he added.