Employment Act amendments bring rising costs for employers

SHAH ALAM - The implementation of the Employment Act 1955 (Amendment 2022) on Jan 1 will bring up the costs for employers by 15 to 20 per cent.

Mydin's managing director Datuk Ameer Ali Mydin said the increase in cost would cause most businesses to let the costs be absorbed by consumers, which would lead to an increase in the price of goods.

He said the government should enforce the act in stages to ensure employers could prepare themselves for the rising costs.

"The criteria used by the government in implementing this act was for a developed country, Malaysia is a developing country.

"We should also see it from a competitive standpoint among Asean countries," he told Sinar Harian on Tuesday.

He said other Asean countries like Indonesia, Thailand, Vietnam and Cambodia did not use the same criteria, the same goes for China and India.

"However, in Malaysia, we forced small and medium enterprises (SMEs) to implement it until we will lose competitive advantage.

"We want to compete with other countries, but the government is forcing unreasonable rules.

"My prediction is the additional cost of salaries will increase by 15 to 20 per cent. If Mydin paid salaries of RM10 million monthly, that's an increase of RM1 million to RM1.5 million," he said.

The Employment Act 1955 (Amendment 2022) would be implemented on Jan 1, which would cause several changes, among them would be weekly work hours reduced from 48 hours to 45 hours, paternity leave for husbands up to seven days, flexible work hours, maternity leave from 60 days to 98 days and overtime pay threshold raised from RM2,000 salary to RM4,000.

He said the primary agenda for Prime Minister Datuk Seri Anwar Ibrahim was to decrease the cost of living, but with the changes implemented, it would be difficult to be achieved because the additional cost employers bear would be brought towards the consumers.

"We barely had time to breathe after facing the Covid-19 pandemic because of the major losses, with the implementation of the changes the price of goods surely would rise, let's not let it out on those who are doing business.

"These are all causes of costs increasing. At the time banks are having issues aiding SMEs. We are forced to raise the prices to stay open.

"That's not counting if the electricity tariff goes up. If it does, the situation will be worse. We expect the price of goods to continue to skyrocket nationwide. At that time, what will the government do? This is a major problem for traders," he said.

He explained there should be an initial stage, the government can start with the implementation of maternity leave from 60 days to 98 days for the first year.

"If there are those who are not ready, the government could start with 75 days ensuring the costs are not heavily affected.

"In 2024 we could reduce the work hours from 48 hours to 45 hours. The overtime threshold could be raised from RM2,000 to RM2,500 and have a yearly increment of RM500.

"I ask the government to provide subsidies, but the government is not thinking long term.

"We are only given six months, not a year. The amendment should be made in stages for all parties to be happy," he said.