On Friday, 19 March 2022, Prime Minister Datuk Seri Ismail Sabri Yaakob made an announcement that would see the minimum wage being raised to RM1,500 per month, from the current RM1,200. It brought about a mixture of reactions from both employers and employees – from concerns to applause.
Micro, small and medium-sized enterprises (MSMEs) however will be exempted from applying the new minimum wage as the decision for now will only involve private sector companies with a minimum of five workers.
Some had argued that raising the minimum wage across the board would substantially increase the operating expenses for companies, which would then increase the prices of products and services to cover their increased labour costs.
Another argument is that an increased minimum wage will see potential job losses in order for some businesses to maintain profitability. In fact, the president of Malaysian Employers Federation (MEF), Datuk Dr Syed Hussain Syed Husman has described the move to increase as “premature”, and that increases in minimum wages should be done gradually.
These concerns are all valid – an increase of 25 percent as we are moving into the endemic phase will put a lot of financial pressures on businesses as many are trying to rebuild their businesses impacted by Covid-19.
However, the increase in minimum wage will translate into tangible benefits like increased consumer spending, as well as boosted morale. With the current economic landscape especially, the extra RM300 boost could contribute a significant improvement in the standard of living for many.
There is no doubt that raising the minimum wage will see a lot of challenges coming, and there is a definite need for the decision to be refined – after all, making the increase optional – albeit for now – for SMEs, which accounts for 1,226,494 MSMEs, or 97.4% (as of 2021) of overall establishments in Malaysia defeats the purpose of increasing the standards of life for the people who need it the most.
Until the decision is made and enforced, the debate continues.