KUALA LUMPUR, May 10 ― The law does not allow Putrajaya to postpone the minimum wage increase scheduled for July, an economist said amid employer concerns due to the slowing economy.

Dr Zakariah Abdul Rashid, executive director of the Malaysian Institute of Economic Research (MIER), said Putrajaya is obliged to revise the minimum wage rate that was introduced in 2013 and fully implemented a year later.

“Government can’t defer it because it is under the Act. Under the Act, the government has to do it,” he told Malay Mail Online.

Under Section 25 of the National Wages Consultative Council Act 2011, the council is required to review the minimum wages order “at least once in every two years”.

Independent economist Lee Heng Guie pointed out that the government’s announcement to increase the minimum wage rate to RM1,000 and RM920 in the peninsula and East Malaysia respectively was not abrupt as it was made as early as last year.

“I think it's overdue and this revised number has been decided. It was announced in the last Budget and due to implement in July.

“So the government has to make the call but I think they are already committed. I don’t think there will be a U-turn,” he said.

However, Dr Yeah Kim Leng, the professor of economics at Sunway University Business School, said it may be appropriate to delay the minimum wage hike until the economy improved.

“In terms of timing, it may be better to implement at the start of the year when most employers undertake the salary reviews and adjustments after taking into consideration the annual company performance,” he said.

RM1,000 and RM920 ― too much, too little, just nice?

While noting the competing demands that employers and employees have on salary rates, Lee noted that Putrajaya had conducted a careful study and started with initial minimum rates that were not “too excessive” ― RM900 and RM800 in the peninsula and East Malaysia respectively.

“It’s considered quite gradual. It’s not something too steep,” Lee said of the “reasonable” adjustment to the RM1,000 and RM920 rates on July 1.

Lee said that employers will have to ensure that their workers’ productivity levels improve with the higher minimum wage, adding that workers will also need to improve their skills in order to move up to the next level from the typically low-skilled jobs.

“You can’t just stay on this level and hope every two years there’s an adjustment to improve your living standards,” he said.

Zakariah said the new minimum wage levels were arrived at after the National Wages Consultative Council’s technical analysis of data was presented for negotiation by council members, comprising representatives from the government, employers, employees and independent parties.

Although he acknowledged that the negotiated minimum wage rate would not be able to reflect the economic conditions when it is actually implemented, Zakariah said it was a figure that employers and employees had agreed upon.

Yeah said the suitability of minimum wage rates depends on a worker’s location and number of dependents, noting that a large family with a single breadwinner in large cities will find it hard to cope with the current minimum wage levels.

“The new minimum takes into consideration the average cost of living for the respective region,” he said.

Universiti Malaya’s Dr Lee Hwok Aun said the minimum wage rate must continue to increase, but noted that Malaysia should shift in its approach by having policies compelling high hourly productivity and high hourly wages.

This would allow Malaysians to achieve work-life balance with fewer work hours and have work done more efficiently with fewer workers, besides promoting skills upgrading and better employment conditions, he said.

The revised minimum wage rate this July will translate into RM4.81 and RM4.42 hourly rates for peninsular Malaysia and East Malaysia respectively, which Lee said was low and largely due to the calculation based on 48 work hours per week under Malaysia’s definition of full-time employment.

“We should revise this baseline number of hours worked toward international norms of 40 and, at the same time, more drastically raise hourly wages,” the senior lecturer at the university’s department of development studies told Malay Mail Online.