KUALA LUMPUR – The Malaysian Employers Federation (MEF) has urged the government to postpone its proposed review of the national minimum wage as employers affected by Covid-19 have become “very nervous”.
MEF president Datuk Syed Hussain Syed Husman said the employers were faced with “insurmountable” challenges, with more than 32,000 companies shuttering last year.
“Covid-19 has devastated the global economy and Malaysia had not been spared by its onslaught,” he said in a statement today.
“Many employers are still struggling to remain in business as the situation is unceasing.”
Syed Hussain said this in response to Prime Minister Tan Sri Muhyiddin Yassin’s Labour Day address, which included the government’s pledge to review the minimum wage in order to keep them relevant to current economic conditions.
He also appealed to Muhyiddin to delay the review, which is due in February 2022, saying it is not the right time to add up business costs due to loss of business and companies being forced to retrench, downsize or impose pay cuts of between 30% and 50%.
“The majority of employers, especially for SMEs, have not been able to pay their rent and cost of operations, and many don’t even have a three-month funding budget to manage the business,” Syed Hussain said.
“While we are grateful to the government for the handouts to bridge some of the gaps, this has barely addressed their needs and issues.”
Syed Hussain said the uncertainty of Covid-19 has added to the predicament of employers, which threatens the overall survivability of business and the economy.
“MEF is of the position that the status quo should remain for the next two years at least in view of the pandemic.”
However, Syed Hussain said minimum wage hikes are unavoidable due to political factors, the “mistaken” perception of the revised poverty line index, as well as the living wage formulation of Bank Negara Malaysia.
He said the revised poverty line index of RM2,280 was based on gross monthly household income, and not based on the basic income of individuals, while the RM2,700 living wage mentioned by Bank Negara only covered Kuala Lumpur.
“Instead of basic wages, we need to redefine the minimum wage as gross wage, which should refer to total take-home pay – including allowances, commission, incentives, service charge for hotels, and overtime,” he said.
“The minimum wage should also be determined based on geographical location, as less developed states such as Sabah and Kelantan should have lower minimum wages to encourage employers to move there and create employment for the locals.
He added the government should continuously assist and provide incentives to private-sector employers to create more job opportunities, with some jobs being rebranded and enriched to attract local employees and reduce dependence on foreigners. – The Vibes, May 2, 2021
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