KUCHING: Any increase in the minimum wage to the proposed RM1,500 will have a negative effect on business, work opportunity and may even derail economic recovery in the aftermath of the Covid-19 pandemic.
Sarawak Business Federation secretary-general and Associated Chinese Chambers of Commerce and Industry of Sarawak (ACCCIS) secretary-general, Datuk Jonathan Chai highlighted these points in response to a recent statement by Human Resource Minister, M Saravanan on revising the minimum wage.
He said most businesses were neither ready nor in a position to implement the proposed new minimum wage as they were still reeling from the devastating impact brought about by the pandemic.
“I am not sure whether the latest revision of the minimum wage would be implemented uniformly across the country and if it is, this will have far reaching effects on businesses in Sarawak especially the small and medium enterprise (SMEs) and the traditional micro enterprises in the rural and coastal areas.
“Imagine the grocery stores or coffee shops in places like Lundu or Baram, you simply can’t expect the business operators to pay their employees a monthly salary of RM1500. Similarly, you can’t possibly get someone to work for you for RM1500 a month in Klang Valley,” Chai said in a press statement on Monday.
Towards this end he said the statutory minimum wage should be territorial instead of across the board and that it should also be sectorial as the requirements of skills and qualifications differed from one sector to another.
“I think the latest proposal requires further deliberation and comprehensive study as increasing the minimum wage could eventually lead to a higher unemployment rate as some employers and companies would end up hiring fewer workers.
“Worst still, certain family-run businesses in the rural area might even make redundant their existing workers in order to maintain the profitability of the business.
“Workers who are perhaps willing to work for lower wages would be denied work opportunities as a result of such increased minimum wage,” he argued.
Chai conceded that the negative impact of a higher minimum wage could be offset by increased productivity by workers.
“But sad to say, much more will be needed to be done in order to raise the productivity of our workforce especially for Sarawak. The policy makers should have more and ongoing consultations with the stakeholders and the business community to tackle the underlying issues relating to the costs of doing business and the rising prices of the goods and services.
“We have empathy for the low-income earners with the rising cost of living but we must be practical and realistic, revising the minimum wage may not be the right option to take as it will have the spiral effect of pushing up the prices of goods and services with the increased operational costs in doing business,” he stressed.
Chai said the move would in effect hamper the progress of recovery and kill off the creation of more job opportunities in this challenging time.
