Minimum wage - Dr M cites competitive edge, depleted coffers

Malaysia risks losing its competitive edge if the minimum wage is raised too drastically, Prime Minister Dr Mahathir Mohamad said today.

He also said the government's hands are tied with regard to finances and it cannot afford to increase government spending.

“There are some who think that minimum wage should be RM1,800. Some say it should be RM1,500.

“But we are in a difficult situation, where much of the money that is supposed to be there has been used to repay huge debts. Even servicing the interest is a huge expense. That' why we can’t raise government spending.

“Also, we have to remember that we are competing with other countries. If cost increases are too high, we would lose our competitive edge,” he told a press conference in Petaling Jaya.

Mahathir was responding to the backlash from various quarters, including the Malaysian Trades Union Congress (MTUC), which accused Putrajaya of betraying poor workers.

Mahathir was responding to the backlash from various quarters, including the Malaysian Trades Union Congress (MTUC), which accused Putrajaya of betraying poor workers.

The Federation of Malaysian Manufacturers (FMM) said the increase in Peninsular Malaysian is reasonable, but “painful” for manufacturers in Sabah and Sarawak.

The Prime Minister’s Office announced on Sept 5 that the minimum wage would be set at RM1,050 per month nationwide, beginning 2019.

This represents an RM50 increase for workers in Peninsular Malaysia, and an RM130 increase for workers in East Malaysia. However, the increase will not be backed by any government subsidy.

Streamlining the minimum wage between East and West Malaysia is one of the promises that Pakatan Harapan promised to deliver in its first 100 days in power, as well as to start the process of subsequently increasing it.

In addition, the Harapan manifesto promises to raise the minimum wage to RM1,500 per month nationwide within its first term in power and to review the figure every two years.

To do this, the manifesto promised that the government would subsidise employers for half of the wage increases.

“This means that when the minimum wage is raised from RM1,000 to RM1,500, the Pakatan Harapan government will share the cost difference of RM500 with the employer equally,” the manifesto states.

Deputy Finance Minister Amiruddin Hamzah had pleaded to the people for time to fulfil Harapan’s promise of raising the minimum wage to RM1,500.

- Mkini