Let’s recover first before imposing minimum wage, say Sabah bosses

 

Foo Ngee Kee and Yap Cheen Boon say smaller companies may be forced under if the rule is enforced.

KOTA KINABALU: Sabah businesses fear that the revised minimum wage of RM1,500 will doom many local companies which have yet to recover from the effects of the Covid-19 pandemic.

Sabah Small and Medium Enterprises (SME) Association president Foo Ngee Kee said implementing the minimum wage on May 1, or soon after, might be the deciding factor for some of the remaining businesses to cease operations.

Foo was speaking on behalf of eight Sabah associations, including the Sabah Timber Industries Association, Sabah Furniture Association, Sabah Housing and Real Estate Developers Association and the Sabah Employers Association.

“The group isn’t against increasing the minimum wage, but right now, it’s beyond their financial means after the impact of the pandemic.”

“It is best that the wage increase be introduced when businesses have recovered significantly so they can afford to pay the hefty increase of 25% from the current rate of RM1,200,” he said.

Spillover effect on smaller companies

Micro, small and medium-sized enterprises will be exempted from applying the new minimum wage by May 1. However, enforcing the rule on larger companies would create a spillover effect on smaller businesses.

“It will also cause an increase in the costs of supplies to SMEs and lead to inflationary pressures which will erode the purchasing power of employees, despite an increase in their wages,” he said.

Entrepreneur development and cooperatives minister Noh Omar said earlier this week that only larger companies would be required to pay the new minimum wage by May 1.

The minister said the government had decided to postpone the deadline for MSMEs because of the effects of the Covid-19 pandemic on smaller businesses.

Companies still “in the dark”

Sabah Employers Association president Yap Cheen Boon said he was unsure what to make of Noh’s remark. He said decisions on wages had always been under the purview of the human resources ministry.

“Until the decision is made and enforced, as amended and gazetted through the Minimum Wage Act, we are still very much in the dark,” he told FMT.

He said some companies may be forced to downsize or close down, but unskilled disadvantaged groups will find themselves out of jobs, if not forced to go underground and be exploited.

Foo said the government had yet to resolve the twin problems of mass unemployment and recovery of SMEs and other businesses.

The new minimum wage would also affect industries which have large foreign investment, such as the wood-based sector.

He said the minimum wage is far lower in Vietnam and Indonesia, which are Malaysia’s direct competitors in wood-based industries. - FMT