Minimum wage ‘solves one problem but creates another’

KOTA KINABALU: The implementation of the RM1,500 minimum wage for certain sectors come May 1 should be reconsidered in Sabah, say business associations.

Malaysian International Chamber of Commerce and Industry branch chairman for Sabah Datuk Seri Wong Khen Thau said this was not just a matter of raising workers’ salaries, but a factor that would cause a chain reaction in the overall economic scenario.

“For one, we know that employees are badly affected by the pandemic and rising cost of living, due to increased manufacturing, supply and logistics costs. But at the same time, employers are also suffering because they have less income and profit while the cost of production has increased,” he said, adding that the minimum wage is like adding salt to their wound.

Wong said instead of giving such a drastic increase in minimum pay, it would be more feasible to do it gradually and in stages and that Sabah’s minimum pay scale had been quite left behind compared with other states in the country, and to suddenly increase it by RM300 from the current RM1,200 is a bit too much.

He added that while larger and more financially stable companies would be able to better absorb all the higher operational costs compared with smaller establishments, it would not cover the fact that in most cases, the end cost would be borne by consumers.

“So, with RM1,500 as minimum wage but with everything else getting more expensive, nothing is solved. It’s just going back to square one,” Wong said.

He also said that although some sectors would be exempted from implementing this minimum wage, the problem that affects everyone remains. He said there would be more migration of workers from sectors that do not need to pay higher wages for now, such as the tourism industry, to sectors where they could get better salaries.

This would result in a shortage of workers in certain sectors.

Wong added that increasing the minimum wage does not equal improving the standard of living if it is done in haste and no concrete benefit would come from it.

“Any increase in minimum wage has to be in line with the productivity perspective or else you are only seemingly solving one issue by creating another problem,” Wong said.

Kota Kinabalu Chinese Chamber of Commerce and Industry president Datuk Michael Lui said the wage hike should be done in stages and not be rushed.

He said there would be retrenchment or selective employment of workers, resulting in a higher unemployment rate.

He added that workers who stay in their jobs but do not enjoy the increased minimum pay would feel that they are being treated unfairly.