IDEAS says yes to minimum wages hike every 2 years despite brickbats from bosses

15 Feb 2022 12:41pm

Bosses say now is not the right time to increase the cost of doing business and the proposed RM1,500 new minimum wage implementation would derail economic recovery.

SHAH ALAM: A think tank has proposed the minimum wage raised every two years to reflect the economic situation on the ground as the present entry level wages remained almost the same for the past 15 years.

The Institute for Democracy and Economic Affairs (IDEAS) added wages have not increased since trade and workers associations do not have stronger power to negotiate wages.

"With no other way to negotiate wages, the minimum wage law is our only device for wage growth in the country.," said Dr Juita Mohamad, acting research director and director of Economic and Business Unit for IDEAS,

She said any review of the minimum wage needs to mirror inflation, as well as rising costs of living.

"Wages should increase according to provinces or even occupations and sectors so that they account for demand and supply of a certain sector and mirror the living costs of a certain area. But the increase should be timely and periodic," she pointed out.

Human Resource Minister Datuk Seri M Saravanan recently announced that a minimum wage of around RM1,500 a month is expected to be implemented before the end of this year.

He said the new rate had yet to be finalised as the ministry was awaiting Cabinet approval and the issue needed to be resolved as soon as possible.

Juita warned that suppressing wages was not a sustainable way to keep costs of production and prices of costs low.

Minimum Wage in the Path of Economic Recovery

The proposed minimum wage increase has yielded brickbats from associations representing industries and employers.

The Malaysian Employers Federation (MEF) reiterated that now is not the right time to increase the cost of doing business and the proposed RM1,500 new minimum wage implementation would derail economic recovery.

Meanwhile, the Federation of Malaysian Manufacturers (FMM) expressed concern about the proposed increase to RM1,500 a month from the current RM1,200, saying adjustments to wages must be done progressively.

President Tan Sri Soh Thian Lai said the proposed 25 per cent increase in the minimum wage to RM1,500 would have an undesirable impact on the economy, especially in the present circumstances.

To minimise the negative effects of the price hikes on consumers in the short term, Juita suggested that the fiscal policies, including subsidies and price ceilings ought to be deployed by the government.

"However, in my view, these instruments and interventions need to be introduced in a timely fashion in light of the potential increase in the minimum wage threshold this year to RM1,500 per month," she said.

Bank Negara Malaysia has the power to adjust the interest rate to ensure that inflationary pressures are kept at bay, she added. - Bernama