SMEs may pass on minimum wage costs to consumers

PETALING JAYA: Business owners and employers warned that the new minimum wage – which they have called for it to be deferred – will see consumers ending up having to pay more for goods and services.

SME Association of Malaysia immediate past president Teh Kee Sin said employers in the small medium enterprises would be burdened by the need to cough up more for operational costs and these would have to be passed on to consumers.

“Consumers would definitely have to pay more. In the end, it will also be hard for those earning the RM1,000 minimum wage,” he said in an interview yesterday.

He was responding to the implementation of the new minimum wage starting this July as announced by Prime Minister Datuk Seri Najib Tun Razak.

The Prime Minister announced the increase in minimum wage in Budget 2016, with RM1,000 being the minimum in the peninsula and RM920 in Sabah, Sarawak and Labuan.

Previously, the minimum wage, implemented on Jan 1, 2013, was RM900 for workers in peninsular Malaysia and RM800 for those in Sabah and Sarawak.

Teh said minimum wage should not be looked at as a temporary measure by the Government in its bid to propel the country into a high-income nation status by 2020.

“What needs to be done is training and skills development because the salary must be in tandem with the skills that our workers have.

“If you develop their skills, they will have better opportunities to earn better salaries,” he added.

Teh also said some of the SME employers had already braced themselves for the new minimum wage implementation by putting their employees’ salary increment on hold for this year.

“Usually, the increments come in earlier in the year but it has been put on hold. They’ll treat it like any other salary increment come July,” he said.

When the revision to the minimum wage was announced, employers had wanted the rate to remain at RM900 while MTUC wanted this to be raised to RM1,200 and standardised across the country.

The Federation of Malaysian Manufacturers had repeatedly warned that the new wage level would “impact small businesses”.

Master Builders Association Malaysia president Matthew Tee said many employers in the construction industry already paid their workers well above RM1,000 but hoped that the Government would consider postponing the proposed Employment Insurance Scheme.

“We are paying for too much at the moment, including the recent increase in foreign workers’ levy. The minimum wage will affect other industries, but the insurance scheme would affect all the employers.

“I hope the Government would at least wait until the economy fully recovers to consider implementing the insurance scheme,” Tee added.