Minimum Wage Order forcing establishments to close due to unsustainable fees

PETALING JAYA: Childcare centres could be on their way out by the end of the year, with between 80% and 95% of the 5,421 registered centres likely to close down – no thanks to the rise in minimum wage.

Most of those charging below RM300 are likely to fold by December.

A survey of childcare centres in Terengganu, Pahang, Kedah, Perak, Negri Sembilan and Sarawak showed that almost all of those catering to the low- and middle-income families, are either preparing to close shop or have already folded in the past six months, said Association of Regis­tered Childcare Providers Malaysia president P.H. Wong.

The Minimum Wage Order 2016 was implemented in July.

On average, operators charge between RM250 and RM350 per child. But, to be sustainable, they have to charge at least RM450, Wong told Sunday Star.

A childcare centre in a single storey terrace corner lot is allowed to house a maximum of 20 children. If they charge RM300 per child, the total income is only RM6,000 per month.

“At the very least, you’ll need four personnel. With minimum wage of RM1,000, that’s RM4,000 without EPF contributions. What about other operating costs?” asked Wong.

Under the minimum wage rule, workers in the peninsula are entitled to not less than RM1,000 a month while it will be RM920 for those in Sabah and Sarawak.

Those who flout it will be liable to a fine and a jail term.

“Preliminary results indicate a worrying trend. It’s the same everywhere.

“Those that managed to stay open have adopted ‘creative ways’ to survive,” said Wong, adding that in Malacca, operators had resorted to hiring contract staff and part-timers or cutting back on the work hours, to avoid paying minimum wage.

Some make their staff take on more responsibilities or conduct evening classes to earn more.

“Others only accept older children as they require less attention but the demand is for centres that accept babies,” she said.

Unlike other businesses, a centre’s income was limited by the number of children they were able to take, she said.

She said operators could not raise their fees because parents would move their children to cheaper unlicensed centres or babysitters, putting the chlidren’s safety at risk.

Women, Family and Community Development Ministry Deputy Minister Datin Paduka Chew Mei Fun said the Government was aware of the issues faced by the operators.

“A paper on the minimum wage impact is being prepared. It’s a concern and we’re addressing it holistically,” Chew, who leads a taskforce on early childhood care and education, said.

She said an intensive three-day lab would be held this month to look into making quality childcare accessible and safe.

A report would be submitted to Women, Family and Community Development Minister Datuk Seri Rohani Abdul Karim soon, she said.