KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) appeals to the government to maintain the current minimum wage, following MTUC’s suggestion for a 50 per cent hike to RM1,500.
“Any increase in the immediate term should be deferred,” it said, urging that the current minimum wages of RM1,000 for Peninsular Malaysia and RM920 for Sabah and Sarawak to be maintained.
In a statement today, FMM said companies need stability and adequate time to adjust to burgeoning costs.
FMM was responding to the Malaysian Trades Union Congress' (MTUC) recent proposal to the government to raise minimum wage from RM1,000 to RM1,500 for Peninsular Malaysia.
Manufacturers described the quantum as excessive when compared to the government’s gradual increase of RM100 or 10 per cent in July 2016.
Any increase to the minimum wages should be gradual and reasonable, it argued.
“A minimum wage at RM1,500 is too high a basic wage, especially for unskilled workers and new entrants to the job market,” it said.
The FMM said in the manufacturing sector, workers are paid allowances on top of basic wage.
Therefore, the take-home pay is higher than minimum wage. A high basic wage affects overtime, increments and bonus payments.
There are also knock-on effects on wages across the board, all of which could force companies to restructure, including possibly reducing employment opportunities, to address spiralling costs of doing business, it said.
The FMM cited the Department of Statistics (DOS) Salaries and Wages Report 2016, released in July 2017, where the manufacturing sector employed 1,198,300 workers at an average salary of RM2,129 a month.
A RM500 increase in basic salary across the board means an additional labour cost of over RM599 million a month for manufacturing and RM6.8 billion a month for the overall economy.
The average salary of plant and machine operators is also already at RM1,662 per month, FMM said.
At RM1,500, Malaysia would have the highest minimum wage rate in Asean, excluding Singapore.
“Companies need to stabilise operations following wage adjustments to the last increase in minimum wage in July 2016; and other concurrent increases in the costs of doing business in 2016 and 2017.
“The government should not be pressured to increase minimum wages. Although required under the National Wages Consultative Council Act 2011, a review of minimum wage rate once in every two years should not mean a continual and certainly not a drastic increase,” it said.
The FMM said companies have been fair and continue to give increments and bonuses to workers.
It also urged the government to undertake a thorough survey to gather data from employers on their capacity to continually absorb rising costs of doing business, especially labour related.
There is need to engage all relevant stakeholders and conduct a Regulatory Impact Assessment on cost increases, it added.
“Minimum wage must commensurate with productivity gains. The more important focus is to ensure wages is in tandem with productivity growth, as well as differences in cost of living and economic activity between states and zones, as provided in the NWCC Act and practised for private security guards.
“Raising the minimum wage rate in a drastic manner would worsen huge outflows of foreign exchange through workers’ remittances, which is also of concern to the government,” it said.