Employment Act amendments: SMEs worried will go out of business

SHAH ALAM - Small and medium enterprises (SMEs) employers express their concerns about the risk of going out of business by the implementation of the Employment Act 1955 (Amendment 2022) on Jan 1, 2023.

1108 Hotel & Resort Sdn Bhd Chief Executive Officer Zamari Muhyi said if employers from the tourism sector were forced to continue with the amendment, it would affect the operating costs and cause inefficient productivity.

He said the high operation costs were not only from the point of view of employee wages but also due to the increase in the price of goods and services from suppliers.

"In the end, employers or entrepreneurs have to raise the price of the accommodation as well as goods and services.

"For licensed accommodation businesses, we are forced to bear losses from the actions of the Online Travel Agents (OTAs) who sell accommodation rooms according to their prices and could result in fewer profits for the employers.

"The lack of income from businesses could cause the risk of entrepreneurs downsizing or closing the business," he told Sinar Harian.

He explained as a whole, the amendment was not suitable for the travel industry because many employers had over five workers and worked irregular hours.

Dhia Milyoun Operations Manager Farhana Zainuddin expressed her concern about having to downsize or close down operations due to the burden of increased operating costs.

She said SME owners had just gone through the phase of minimum wage increase and raw materials that were unstable in the market.

"The new act is affecting employers like me because the SMEs had just recovered from the movement control order (MCO).

"I saw businesses close or downsize around me because of the increase in operational costs once again. I hope the government can aid us in this issue," she said.

Chortiez & Co Manager Fakhruddin Abd LAtiff said the food and beverage (F&B) industry businesses such as his were forced to bear the increased operating costs due to differing operation hours compared to other businesses.

"Operation hours were not the same as the eight hours in an office. However, the amendment from 48 hours to 45 hours forced us to hire more workers to cover our operation hours.

"The losses or going out of business may not be affected, but the operating cost will increase," he said.