MCA spokesperson Saw Yee Fung has lauded the new RM1,500 minimum wage starting May 1 but reminded that many businesses are still struggling to adapt in this post-pandemic era.
She welcomed the caveat by Prime Minister Ismail Sabri Yaakob that the new minimum wage only involves employers of large companies and does not cover micro, small and medium enterprises (SMEs).
She suggested that these SMEs be given three to five years before having to make a similar adjustment.
"MCA very much welcomes this minimum wage postponement to SMEs, because clearly, too many small traders are still struggling.
"In the meantime, we should appreciate the contribution of small traders who continue to employ their employees throughout the implementation of the Movement Control Order even though they themselves are facing difficult times due to the pandemic.
"Therefore, the government is advised to set a period of between 3 to 5 years given to SMEs before requiring them to fully implement the new minimum wage," said Saw in a statement today.
Ismail Sabri made the announcement over the weekend at the Umno general assembly, saying that the current minimum wage of RM1,200 will be raised by RM300 on May 1.
“The new minimum wage is a benchmark that enables the B40 group to achieve socio-economic objectives,” Saw said.
“Moreover, the pandemic era has seen the shift of many M40 households slipping into the B40 group, resulting in an increase in the number of B40 households nationwide.”
She expressed confidence that the gradual minimum wage implementation will give SMEs an opportunity to be more competitive.
"We do not want to see SMEs go bankrupt, causing their employees to lose their source of income due to the implementation of the RM1,500 minimum wage at a time when new SMEs are about to recover from the current Covid-19 pandemic," she added.
Creates more issues
Kuching DAP Youth head Michael Kong Feng Nian also struck a similar note saying the new minimum wage has to be properly planned and discussed with all stakeholders including trade unions and associations.
"Most businesses have been badly hit due to little or no help from the government.
"Though it was announced that this salary increase will not be applicable to SMEs, it does not help to solve any issue but instead creates room for more issues.
"For example, coffee shops that have fewer than five employees may not need to match the RM1,500 salary. However, there will be numerous coffee shops out there offering a minimum salary of RM1,500.
"With a difference of RM300 per month, many of these workers would be tempted to leave the smaller shops and this will result in many small businesses losing out due to a shortage of manpower.”
Kong said the smaller coffee shops would then have no choice but to also pay a minimum RM1,500 despite it not being mandatory.
Kong suggested that instead of making the change an immediate one, there should be a plan by the government to raise the minimum wage gradually year by year; not through a sudden 25 percent hike.
"This would ensure that the impact of the increase is cushioned and that the trickle-down effect on the economy and inflation is lessened.
"Such a mechanism would also, in turn, help the people to cope with inflation and at the same time allow companies to properly plan and manage their organisation instead of being caught in a difficult position of retrenching staff," he said.
He also urged the government to pay attention to the predicament of youths who are not adequately remunerated, saying there was a danger they would be taken advantage of due to the current unfavourable economic climate. - Mkini
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