KUCHING: Malaysian Employers Federation (MEF) has estimated that the increase in minimum wages would add RM2.5 billion yearly in remittances to home countries, adding about seven percent to the estimated RM34 billion per year currently being remitted by foreign workers.

Datuk Shamsuddin Bardan

“It is obvious that higher remittances made by foreign workers to their home countries would impact the strength of the ringgit,” MEF executive director Datuk Shamsuddin Bardan said in a statement yesterday.

He said that MEF supported the government’s policy to reduce dependence on foreign workers, actively engaging with the government on such matters.

He said that the government allowed the utilisation of foreign workers from selected source countries.

Shamsuddin was responding to statements made by Malaysian Trades Union Congress (MTUC) Sarawak secretary Andrew Lo, and Labour Law Reform Coalition co-chair Gopala Krishnan regarding the government’s decision to implement minimum wages of RM1,200 in 57 bigger cities and towns starting January 1, 2020.

He said that one of MEF’s major concerns was illegal foreign workers, adding that the present recruitment system and forced labour originating in their home countries may be contributing factors.

“In addition to high recruitment and levy costs, about ten percent of the approved foreign workers would abscond soon after they arrive — for which employers are also being fined amounting to RM250 for each foreign worker who absconds,” he said.

He pointed out that employers preferred recruiting local workers instead, but a shortage of workers in certain sectors forced them to depend on more expensive foreign workers.

Shamsuddin said that claiming employers were ‘manipulative and exploitative’ towards foreign workers was absolutely false and unfounded.

He said that the implementation of RM1,200 as a minimum wage would cause much confusion and anxiety among employers and employees as the demarcation of boundaries was unclear, adding that employers had little time to make the necessary adjustments and arrangements.

MEF called for the determination of wages based on certified skills of employees.

“To compare minimum wage rate in Malaysia with other countries is anecdotal at best as the level of labour productivity in Malaysia is much lower compared to developed countries such as Australia,” Shamsuddin added.

He urged the government to set aside the levy paid by employers for foreign workers to assist employers to automate and mechanise their operations in light of new technologies from the 4th Industrial Revolution.