Increase in minimum wage could have negative impact on security industry, says association

KUALA LUMPUR: An increase of the minimum wage to RM1,500 could have a serious negative impact on the security industry, says the Security Industry Association of Malaysia (PIKM).

Its president Datuk Seri Ramli Yusuff said increasing the minimum wage to RM1,500 should not be carried out yet as the government and its agencies are not ready to increase the price of services of security guards.

"Clients from the corporate and private sectors are not ready to pay more for security services as well. The security guard service is still labour-intensive and having men guarding premises is still the preference in the country," he told a press conference on Thursday (March 24).

Ramli said that an increase in the minimum wage would lead to security companies being unable to fulfil their obligations to their workers, especially security guards.

"This is the reality and not something that the government should take lightly," he added.

From May 1, the basic wages for a security guard will increase from RM5.77 to RM7.21 per hour, which is a 28% increase, based on the increase of the minimum wage from RM1,200 to the recently announced RM1,500.

On this, Ramli said that the increase of RM1.44 in hourly wages can lead to a RM700 monthly increase in overtime payments for full-time guards.

"In fact, their salary could reach RM3,000 monthly. It is a good thing and PIKM members agreed that it will increase the benefits for security guards,” he said.

Ramli said that security companies have to give remuneration for overtime to fulfil the requirements under the Employment Act 1955.

“The payment for this differs based on the rate set by the law on regular working days, leave and public holidays while statutory contributions such as EPF and Perkeso are among the employers' responsibilities as well,” said Ramli.

He added that security companies also have to prepare uniforms for the guards and other equipment including vehicles based on needs to ensure effective security guard services.

"Operations in the field must also be strengthened with hiring support staff or supervisors to ensure operations run smoothly," he said.

"However, due to the increase in other aspects following the increase in minimum wage to RM1,500, security companies have to charge RM12 per hour for their services to earn a 10% profit,” added Ramli.

He said that security companies could only get profit ranging between 3-5% since the previous increase of minimum wage of RM1,200 meant that the government, its agencies as well as other clients were not ready to pay the rate of RM9.50 per hour.

Furthermore, Ramli said arreas totalling RM54mil from the adjustment of the minimum wage to RM1,200 have not been paid.

He also said that PIKM, representing 950 security companies, feels that a minimum wage increase to RM1,500 will have negative effects on the security industry including an increase of groups offering their services at a lower rate compared to security companies.

"We urge the government to delay in increasing the minimum wage and study its implication to security companies, which falls under the small and medium enterprises (SME) category," added Ramli.