Kuala Lumpur: The minimum wage increase as announced by the government in the Budget 2016 will likely cause many small Malay traders to be out of business.Malay Hawkers and Small Traders Association of Malaysia deputy president Datuk Mohd Mahmud said he was taken aback by the announcement that the minimum wage is being raised from the current RM900 to RM1,000 from July 1 next year.
"Many small time traders are already struggling to pay the RM900 minimum wage. Now with it being raised many will have to close their businesses," he was quoted saying. He said the government should review its decision as it would only burden the traders."With the uncertain economic situation causing a slump in business how will they pay the minimum wage increase?" he asked.
He said the government should have discussed to get feed backs with relevant parties before making the sudden announcement.Prime Minister Datuk Seri Najib Abdul Razak on Friday when tabling the Budget announced that the minimum wage in the private sector will be increased to RM1,000 from RM900 in the peninsular, and RM920 from RM800 in Sabah, Labuan and Sarawak.
However, Class F Bumiputra Contractors Association President Tukiman Radion said his party was not affected by the increase as they have previously paid their workers more than the minimum wage benchmark."We pay our workers daily instead of monthly, and usually the paid salary is between RM80 to RM90 per day," he added.In IPOH, small and medium enterprises (SMEs) are likely to feel the pinch of rising operational costs with the increase in minimum wage for private sector employees.
Federation of Malaysian Manufacturers Perak branch Chairman Datuk Gan Tack Kong said the increase is not popular with SMEs, considering the current economic condition.He said SMEs, especially in the rural areas, would be adversely affected."Even now they are suffering to operate their businesses at peak level due to higher operational costs with the implementation of Goods and Services Tax (GST) and the depreciation of ringgit," Gan said.
Though the increase is slightly above 10 per cent, he said it was a wrong move as industry players in various business sectors were still trying to cope with the current financial problems.
"If not for the economic situation, I don't think it would be a problem for us to go along with the move," he said."We understand the rationale, which is to help people cope with the increased costs of living."On the converse, Gan said the new minimum wage scheme would be effective to retain foreign workers, especially those working in factories."Factory owners are actually facing problem retaining foreign workers as most of them have decided to return home due to the falling of the ringgit," he said.
With the new scheme, he pointed out foreign workers can now have another reason to keep working in Malaysia as they would be able to send more cash to their families."Most local workers do not want to work in factories, especially in industries with the 3D factors: dusty, dangerous and dirty," he said.Asked on the effectiveness of the new scheme in attracting more locals to join the workforce, Gan said it was highly unlikely.
"It is unlikely for city dwellers because the increment is small. However, it might work for those in rural areas." In Petaling Jaya, Cuepacs called on employers not to take advantage of the increased minimum wage as a reason to retrench employees.Its president, Datuk Azih Muda acknowledged the new minimum will increase operational cost, but believed such situation can be overcome with pushing for higher productivity."This is where employers will tend to take advantage of the situation, by avoiding to pay employees who are not performing up to par," he said.
Azih stresses that employees should focus on productivity to avoid being retrenched. He lauded the government's move to help people cope with the rising costs of living."This shows the government is concerned and appreciates workers' contributions towards the growth of the country," he said.