Permanently exempt micro firms from minimum wage policy, urges MEF

 

Small enterprises with five or fewer workers are exempt from the minimum wage policy, but will have to comply beginning July 1. (Bernama pic)

PETALING JAYA: The executive director of the country’s largest employers’ grouping has called on the federal government to consider permanently exempting micro enterprises from compliance with the RM1,500 minimum wage.

With a July 1 deadline fast approaching, Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan said the adequacy of cash flow and capital remains a major challenge for small businesses.

He said micro enterprises were critical to the economy, and called on the government to consider the issue from their point of view rather than through the lens of government-linked companies and major corporations.

“The main problem is the high cost of living, which is an issue beyond the minimum wage. Any increase in basic salary will not address (the lack of) cash-in-hand for employees if the cost of living keeps increasing.

“One must also realise that a worker’s basic salary is only at entry level. Once employees perform, they will get salary adjustments based on the market value, which would normally be much higher than the minimum wage,” he told FMT.

As an example, Shamsuddin pointed to South Korea, where the government exempts enterprises with 10 or fewer employees from its minimum wage policy.

The new minimum wage came into effect across all sectors on May 1 last year, but employers with fewer than five workers were given an exemption until Dec 31, 2022. The government later extended the deadline to July 1.

Saying the government should resist the populist move of raising the minimum wage, Shamsuddin urged Putrajaya to leave the matter to the tripartite National Wages Consultative Council comprising employers, employees and the government.

The Small and Medium Enterprises Association (Samenta) said Putrajaya should stop resorting to reactionary policies to address economic issues such as low income, productivity as well as social and employment mobility.

Samenta chairman William Ng said such issues arise due to underlying factors which cannot be addressed simply by cutting the profit margin of small and medium enterprises (SMEs).

“For the economy to grow, we need strong policy directions and certainty that any growth will benefit shareholders and investors. An ultra-low margin does exactly the opposite.

“We are hopeful the government understands the plight of the business community, especially SMEs, and is doing all it can to contain attempts to pass the burden to businesses,” said Ng.

However, the Malaysian Trades Union Congress (MTUC) said the minimum wage hike for micro enterprises cannot be delayed any further, adding that the RM300 increment would help workers in small firms offset the rise in cost of living.

MTUC president Effendy Abdul Ghani also said the increase would motivate workers and increase productivity.

“The increment will not trickle down to consumers. An increase in salary is an increase in purchasing power. If you don’t standardise the minimum wage, it will kill the industry in the long-term,” said Effendy.

Parti Sosialis Malaysia deputy chairman S Arutchelvan agreed with Effendy, saying employers should not hire anyone if they could not afford to pay them the minimum wage. - FMT