PETALING JAYA: The government should monitor prices and conduct checks to mitigate “wage-push inflation” due to the new minimum wage policy, according to an expert.
Think Tank Social and Economic Research Initiative managing director Rashaad Ali said there is a need to be wary of rising costs following the RM200 increase in salary.
“A wage increase is a step towards helping lower income groups manage existing high costs. If the country wants to take new steps forward, we must free ourselves from the shackles of cheap and underpaid labour.
“Fairer compensation for workers is overdue and necessary in our current economic climate but the cost of living is already high.
“Thus, we need to be wary of and be sure that prices are not arbitrarily raised because of the increased cost of doing business.
“The government should monitor prices and implement controls in the short term where necessary,” he added.
Economist Madeline Berma of Institut Masa Depan Malaysia said an increase in the price of goods is inevitable once the minimum wage policy kicks in.
“In the short term, the purchasing power of low-income earners will increase.
“However, micro and small businesses may resort to retrenching workers to reduce the cost of doing business.
“Medium-scale businesses are more likely to transfer the rising cost to end-consumers,” said Madeline.
Data from Bank Negara Malaysia revealed that B40 families tend to spend more of their income on food (35%) while M40 spend 30% and T20 23%.
SME Association president Chin Chee Seong said companies with many foreign workers would be affected as they would need to make monthly contributions to the Employees Provident Fund (EPF) as well.
“(Among) labour-intensive industries are manufacturing, agriculture and retail, as well as food and beverage (F&B).
“However, those in retail and F&B will be in a dilemma as to whether they should increase prices.
“For those in manufacturing and agriculture, higher costs will lead to a decrease in competitiveness.
“Some furniture companies had to retrench workers due to the economic situation.
“While it is fair to increase the minimum wage, we ask that it be done gradually,” he added.
Chin also called on the government to not further increase the EPF contributions of foreign workers as all the increase in costs will ultimately be passed down to the consumers.
“We hope there would not be additional costs on us as we already have to deal with more expenses in terms of the e-invoicing requirement,” he added.
Federation of Chinese Associations Sarawak president Datuk Richard Wee said companies would have to find ways to protect their margins and maintain their profitability.
“There are only two ways to address the issue: by increasing revenue and finding ways to contain costs and overhead.”
The first, Wee said, is unlikely as the government has warned against transferring the costs to consumers.
“To mitigate rising wages, companies can increase productivity through automation and upskilling.
“The government should also consider more tax incentives for expenditure such as wages.”
