KUCHING, May 1 — It is not the right time to raise minimum wages as productivity is still in the stage of getting back to pre-Covid-19 level, said SUPP Stakan chairman Datuk Sim Kiang Chiok.
He pointed out that the increase in minimum wages must match increased productivity.
“It is much better that the government help in the cost of living through the present social assistance such as Bantuan Sara Hidup, price subsidy on our petrol, cooking oil and price control on essential items. Cost of living is much better managed with inflation under control with our present method.
“We have not caught up with pre-Covid productivity and we are still in the recovery stage. Our productivity must be given the time for it to catch up to the level before the first Covid-19 lockdown,” he said in a statement yesterday.
Sim opined that increasing minimum wages at this recovery stage might negatively affect productivity rates, with increase in cost of doing business and in cost of living.
“Malaysia faces other challenges with the Ukraine-Russia war that is disrupting world trade equilibrium, weak Malaysian Ringgit that will increase cost of import, and cost of living is rising due to more expensive imports,” he added.
The minimum wage will be implemented from May 1 for companies that employ five or more workers and from January 1, 2023 for other companies.
Sim said raising the minimum wage will have implications on the economy.
“For the employees they would be happy that they will be receiving a pay rise of RM300 from RM1,200. This pay rise is irrespective of their productivity and will affect the cost of doing business in Malaysia.
“For those companies that are doing well, this increase can be absorbed but for those who are still struggling to recover from the pandemic disruption they will have one more challenge to overcome,” he explained.
Bigger companies would have to start planning manpower requirements carefully, and may reduce or redeploy their human resources so that cost of doing business can be controlled, he added.
“All these additional costs by increase in salary will be passed onto the selling price that will eventually affect the employee’s cost of living.
“The increase in minimum wage will also have a knock-on effect on the other employees on the different salary scales who will also seek similar revision in their salary, which will put pressure on employers to increase their salary,” Sim added. — Borneo Post