New wage policy cuts both ways in Sabah

Unemployment set to rise in Sabah following the implementation of the minimum wage policy, which took effect on Jan 1, 2013.

KOTA KINABALU: As the RM800 minimum wage policy took effect in East Malaysia, the faces of a waiter and waitress from a rural area in Sabah told the story.

Normally dour, 27-year-old Justin served breakfast with a cheery smile today. His colleague, Rita, 19, was sitting in the corner at an empty table looking glum as diners ordered their meals and chatted. Both were pondering their future.

Barely two months into her job, Rita, from the poor rural district of Kota Marudu, is no longer needed as a waitress at the coffeeshop. Their boss, known only as Liew, has just told them his decision – one gets a pay rise, the other, the chop.

Explaining his stance to a curious customer who was paying her bill, Liew said he had no option but to let some of his inexperienced staff go and increase the wages of the rest of his staff along with their duties in line with the Minimum Wages Order 2012 that came into effect nationwide on Jan 1.

“There’s going to be a lot more unemployment… what to do? The government has jumped into this without thinking,” he told his diner who asked if he has been affected by the new law.

“I haven’t raised prices yet but many will. They are already talking about this,” he said of the calls by the various chambers of commerce operating in the state to “rethink the wage policy” to prevent a price increase.

Employers, according to the chambers of commerce representing them, say Sabah’s economy is unique and the minimum wage should not be enforced in the state.

On New Year’s eve, the president of the Federation of Chinese Associations Sabah (FCAS) urged the government to get serious about the higher cost of living in the state and implement measures to counter the “imminent detrimental impact of the minimum wage policy”.

“First and foremost, the government must strive to bring down the prices of food and essential items, a move which is especially crucial for those in the low-income bracket,” said TC Goh, who also pointed to the gloomy global economic outlook for the new year.

The Minimum Wage Order 2012, in accordance with Subsection 23 (1) of National Wage Consultation Council 2011, which was gazetted in July 2012, has fixed the minimum wage rate at RM900 per month or RM4.33 per hour for the peninsula, and RM800 per month or RM3.85 per hour for Sabah and Sarawak.

Burden on businesses

There is also no discrimination between local and foreign workers as the minimum wage is applicable to all, in accordance with international labour standards.

Errant employers can be fined RM10,000 per employee. For a continuous offence, they can be fined RM1,000 per day. Repeat offenders face a RM20,000 fine or five years’ jail, or both.

“I have gathered from quite a number of our members who are in the business that they might be forced to retrench some of their workers in order to cope with the Minimum Wage Order 2012.

“Some might have no choice but to close shop, as they just could not cope with such a burden.

“When this becomes a reality in the near future, the unemployment rate in the state will definitely increase drastically, and this would certainly further have an impact on the state economy and its coffer,” said Goh, who is also president of the Federation of Hokkien Association Sabah and Labuan FT.

He said the implementation of the minimum wage policy was unhelpful to both employers and employees as well and warned that any further increase in the cost of doing business would inevitably create a domino effect that would further burden the people, particularly the poor.

He hoped that whoever gets to form the government after the 13th general election, next year, “would be more considerate towards the people’s plight before implementing any policies or development programmes in future.”

Goh, a prominent businessman, said consumers should start saving and spend prudently.

“If we have been partying for seven days in a week, let us cut that down to just two days. And stop changing your smartphones like changing your shirt. This is very important, as a sen saved is a sen earned.

Lopsided policy

The Indian Muslim Chamber of Commerce and Industries has also issued a similar warning.

Its president, Baisul Khan Salman Harris, said the new wage policy was lopsided as it did not take into account that there there are many types of workers and that the perks they received such as accommodation and food were given in lieu of higher wages.

The Federation of Sabah Manufacturers and the Kota Kinabalu Chinese Chamber of Commerce and Industry share similar misgivings.

But many workers feel that the bosses are just worried about their profit margin and are preparing to pass off the coming price increase on consumers.