PETALING JAYA: The postponement until July of the RM1,500 minimum wage for companies with fewer than five employees is a welcome move, says the Malaysian Employers Federation (MEF).
Its president Datuk Dr Syed Hussain Syed Husman said businesses are expected to face a challenging time in 2023, especially micro-enterprises which typically employ fewer than five people.
“The number of such enterprises is estimated to be about 560,000. The deferment of the RM1,500 minimum wage to July will allow them (some time) to focus on building their business and cash flow,” he said in a statement on Tuesday (Dec 27).
Syed Hussain said MEF is optimistic that once businesses are on a stable footing, the employers concerned will honour the minimum wage requirement.
“Employers value their employees, who are their assets. This is an issue of sustainability and keeping their businesses alive while retaining staff and building their financial position,” he said.
Syed Hussain added that no employer wants to lose experienced workers.
“(A lot of) time and investment have been put into growing skills and knowledge. Having more businesses alive will create more employment,” he added.
“At this tough time, we need full employment to grow the businesses and the national economy,” he said, adding that employers, employees and the government should work together to build the nation.
Earlier on Tuesday, Human Resources Minister V. Sivakumar said the implementation of the RM1,500 minimum wage rule for companies employing fewer than five employees has been postponed from Jan 1 to July.
He said the decision was made after taking into account the readiness of such companies.
However, companies with five or more employees and whose professional activity falls under the Malaysia Standard Classification of Occupation will have to continue paying the minimum wage of RM1,500.
The new minimum wage rate was gazetted in April and came into effect in May.
However, employers with fewer than five employees were initially given an extension until Jan 1.
On the issue of recruitment and management of foreign workers, Syed Hussain appealed to the government to keep this activity under the Human Resources Ministry.
“Putting the Workers Centralised Management System (FWCMS) and One Channel System (OCS) under the custody and management of the Human Resources Ministry will enhance efficiency, remove overlapping services and better manage the demand for foreign workers,” he said.
Syed Hussain said that with the forecasted challenging economic situation in 2023, it is important that there are no bottlenecks in the supply of foreign workers,” he said.
In April, the recruitment and management of foreign workers was revamped with the ministry spearheading the FWCMS one-stop centre.
Syed Hussain said the revamp was carried out in response to a severe shortage of foreign workers faced by all industries due to the freeze on recruitment of foreign workers and the inability to replace those whose temporary work permits expired from early 2020 up to early this year.
“For example, oil palm plantations face an acute shortage of harvesters. This results in a loss of revenue for planters of more than RM1bil per month and (loss of) income to the government due to (lower) palm oil yield,” he said.
“The palm oil industry may not be able to compete with those of Malaysia's neighbours by virtue of higher cost of sales and wastage,” added Syed Hussain.
He said the shortage of workers has severely impacted production especially for the electrical and electronics industries, and has also disrupted supply chains and business operations.
Syed Hussain said this resulted in delays, with businesses being unable to meet new orders from both local and foreign buyers.
“When the Human Resources Ministry was given the mandate to operate and manage the FWCMS from April, the shortage of foreign workers faced by the country eased steadily,” he said.
In October, former Human Resources Minister Datuk Seri M. Saravanan stated there were about 1.24 million foreign workers in the country, almost the same figure as before Malaysia was hit by the Covid-19 pandemic.
There were about 1.5 million foreign workers in Malaysia before Covid-19.
The number of foreign workers was projected to increase as at the material time there were 238,000 foreign workers from the source countries who have been given approval to work in Malaysia and these figures do not include about 640,000 applications that were awaiting the biometric and medical process in October 2022.
Syed Hussain also spoke about the decision by the government on the existing policies concerning foreign worker recruitment and management matters.
“(It was reported on) social media that the recruitment of foreign workers other than from Indonesia will be managed by the Home Ministry,” he said.
“MEF fails to understand how it helps that hiring Indonesians is under the Human Resources Ministry and the most complained-about source countries especially Bangladesh and Nepal are under the Home Ministry,” added Syed Hussain.
He said that MEF believed that the processing of labour demands should be a matter for the Human Resources Ministry to handle.
“The role of the Home Ministry should focus on security issues, managing the issuance of the relevant visas and other border control measures.
“Adopting the previous policies on recruitment of foreign workers will promote more rent seekers and will at the end of the day increase the cost of doing business,” added Syed Hussain.
