Minimum wage triggers more price hikes

The new minimum wage was announced by Prime Minister Datuk Seri Najib Razak when tabling Budget 2016 at the Dewan Rakyat on October 23 last year. — Picture by Saw Siow Feng
The new minimum wage was announced by Prime Minister Datuk Seri Najib Razak when tabling Budget 2016 at the Dewan Rakyat on October 23 last year. — Picture by Saw Siow Feng

PETALING JAYA, July 11 — Your favourite cuppa, roti canai or even fish head curry could see a price hike as businesses grapple with escalating overheads brought on by the minimum wage policy that came into force on July 1.

Malaysia Singapore Coffee Shop Proprietors’ General Association president Ho Su Mong said its members could increase their prices as operating costs were getting higher.

“It is getting harder for our members to do business and we have to adjust prices,” he said, adding that expenses included rental, which was also increasing.

Malaysian Muslim Restaurant Owners Association president Noorul Hassan Sahul Hameed said there was a possibility its members, numbering 3,500 nationwide, could increase prices of food and drinks.

While both associations declined to confirm the price hikes, checks revealed an increase had been in place even before July 1.

“Market forces will be the key factor here. Under the new law, prices are up to the players. Any increase, however, is only to cover the cost increase, not the profit margin,” Noorul said.

He said the price increases could be necessary as the new minimum wage would put more pressure on most members, who were already struggling to maintain a low profit margin in the challenging times.

Noorul said yearly rental increments and a decline in customer spending were adding to their predicament.

More than 70 per cent of the members, with smaller establishments that were usually family-oriented businesses consisting of one or two outlets, would suffer most.

“The public mindset is that we purposely increase prices but sometimes, we have to sell at a loss,” he said.

Noorul said the members usually paid the minimum wage, in addition to food and lodging amounting to an extra RM500 an employee.

On June 30, Human Resources Minister Datuk Seri Richard Riot said the Minimum Wages Order 2016 would be implemented on July 1.

The new minimum wage was announced by Prime Minister Datuk Seri Najib Razak when tabling Budget 2016 at the Dewan Rakyat on October 23 last year, which Richard said gave employers eight months to get their house in order.

For workers paid on piecemeal, tonnage, trip or commission basis, similar rates apply. However, domestic workers are not included in the order.

Ho said that with the increase,  members of his association could be paying as much as RM2,000 a worker, with basic minimum wage, accommodation, meals, drinks and overtime, compared with between RM1,500 and RM1,600 previously.

“We try to maintain a minimum profit margin so it would not burden our customers, who are mostly from the low — to middle — income groups, but it is difficult now,” he said.

The association has 20,000 members nationwide comprising traditional coffee shop or kopitiam owners.

Ho said the members also felt the time given was too short for them to make adjustments to the changes.

“These are things that have to be done gradually,” he said.

The first Minimum Wages Order 2012 was gazetted in July 2012, and implemented on January 1, 2013, with Malaysia joining more than 150 countries that already have minimum wage laws.

Deferments were given to certain groups but those expired on December 31, 2013. 

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”.