PETALING JAYA: With just a day to go before May 1, business groups are still insisting that the implementation of the new RM1,500 minimum wage on Labour Day is too rushed and they are not ready.

       They said more time was needed as immediate enforcement would lead to a chain reaction that could affect the economy, such as inflation since labour cost would rise.

       Associated Chinese Chambers of Commerce and Industry of Malaysia’s SME committee chairman Koong Lin Loong said businesses were still struggling to recover from the effects of the Covid-19 pandemic and the new minimum wage order would affect their progress.

       He said a staggered mechanism of increasing the minimum wage should be put in place, allowing employers to strike a balance between workers’ and operators’ benefits.

       “While we agree with the implementation of the minimum wage, the industry has issues with the timing, which is rather too rushed to go full force.

       “Why not stagger the implementation to mitigate the impact?” he said.

       The staggered mechanism, Koong added, worked by increasing the minimum wage by stages over a period of two years.

       “Let’s say, to increase from (the current minimum wage of) RM1,200 to the proposed RM1,500, for the first year, allow companies to start with giving RM150 and then the other half in the following year,” he said in an interview.

       Increasing the salary of one group of workers, Koong contended, would also lead to increasing it for the rest of the workers and this would cost a company a lot.

       “It will have a ‘domino effect’ which would cause labour costs to increase,” he said.

       Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai also said industries were unprepared for the immediate jump in the minimum wage.

       He said it would represent an increase of 25% to 36% of the basic salary that would have a “tremendous knock-on effect on the overall payroll cost”.

       “It will also cause a spiralling impact on business cost that could potentially derail the economic recovery.

       “FMM has repeatedly affirmed that the industry is supportive of a review of the minimum wage, but based on current economic factors where the business environment continues to be fragile.

       “A progressive adjustment with a RM150 increase in 2022 and a further increase of another RM150 in 2023 to reach the RM1,500 minimum wage would be more manageable for industries,” said Soh.

       To help employers cushion the rise in minimum wage, FMM proposed that the government provide support by increasing the maximum allowable charge for accommodation for employers by RM100 to RM200.

       A tax rebate or reduction of RM150 on the foreign worker levy would also assist employers, he added.

       “The government should also provide a wage subsidy of RM150 per local worker for 12 months to micro, small and medium enterprises,” he said.

       However, the Malaysian Trade Union Congress (MTUC) said industries should have expected the minimum wage revision as this occurred biennially, adding that there should not be any problem for the implementation despite companies having to recover from the pandemic.

       Its acting president Mohd Effendy Abdul Ghani said the country had started its economic recovery from last year through the National Recovery Plan (NRP), with most businesses reopening.

       “The minimum wage should be reviewed and implemented every two years and the industries should know and be ready for it,” he said.

       Some sectors, Mohd Effendy pointed out, had also asked the government to allow them to employ more foreign workers.

       “Previously, it was reported that some sectors requested 500,000 new foreign employees.

       “It shows that they can afford to pay the current workers more in accordance with the new minimum wage,” he added.

       When contacted, Human Resources Minister Datuk Seri M Saravanan said: “Let the implementation go on first.”

       On April 15, the minister said that the demand from industries to bring in more than 500,000 foreign workers reflected that they were doing well economically and should be ready for the new minimum wage.

       The new minimum wage of RM1,500 a month effective tomorrow was officially gazetted on Wednesday.

       The Minimum Wages Order issued by Saravanan was published in the Federal Government Gazette and uploaded onto the official website of the Attorney General’s Chambers on Thursday.