‘BN’s floor wage can bankrupt SMEs’

Pakatan Rakyat MPs point out that, without a facilitation fund, even BN’s RM900 minimum wage could bankrupt low-end manufacturers.

KUALA LUMPUR: Barisan Nasional’s floor wage of RM900 could cause low-end companies to fold as the government will not be providing financial assistance to manufacturers, Pakatan Rakyat MPs said today.

“[In Pakatan’s budget], we will support them with loans, try and give them tax holidays. It’s not just about implementing a floor wage and letting them struggle on their own,” said PKR vice-president Tian Chua at the Parliament lobby today.

Tian Chua said the government could afford to provide such incentives to small manufacturers, citing the tax break given to Australian mining company Lynas Corp.

“But if you want to take care of small manufacturers [by setting the floor wage at RM900 without providing aid], they wouldn’t even be able to afford paying their workers RM700,” he said.

Yesterday, Umno Youth Chief Khairy Jamaluddin had said Pakatan’s proposed minimum wage of RM1,100 would bankrupt the small and medium industry (SMI) and destroy the economy.

But Pakatan MPs insisted today this was not true as their floor wage came hand-in-hand with financial assistance and a policy to stop dependence on foreign unskilled labour.

“Minimum wage cannot come in isolation; we must deduct foreign workers and provide a facilitation fund to help companies adjust to the RM1,100 minimum wage as well as go up the ladder,” said Bukit Bendera MP Liew Chin Tong.

Khairy had also said that the RM900 set by the Barisan Nasional-lead government was a result of consulting stakeholders and research conducted by the World Bank.

But in a joint statement, several Pakatan MPs said the World Bank document showed that a floor wage higher than RM1,000 would see formal employment increase up to 1% in the sub-sectors of the manufacturing of paper and furniture, food and beverages, plastic, glass and transport equipment.

“This increase in formal employment would be accompanied by a small reduction in informal employment,” said Tian Chua, Liew and Kuala Selangor MP Dzulkefly Ahmad in the statement.

“A minimum wage of RM1,100 and up will see the sub-sectors of utilities, construction, trade and accommodation and restaurants reducing both formal and informal employment for low-skilled workers.”

The MPs challenged Khairy to join them in demanding the government declassify the confidential report by the World Bank, titled “Optimal Design for a Minimum Wage Policy in Malaysia” released last year.