Latest wage revision seen as taxing on Sarawak SMEs and small businesses
KUCHING: The Sarawak government and all stakeholders in the state should be consulted before any further revision of the private sector minimum wage is carried out.
Sarawak Business Federation (SBF) secretary-general Jonathan Chai said what was certain was that any upward revision was “definitely taxing on most SMEs”.
“It’s definitely taxing on most SMEs in Sarawak, especially those traditional retail businesses like the sundry and coffee shops,” Chai said when asked by New Sarawak Tribune to comment on a Bernama report yesterday entitled “New minimum wage to benefit 1.28m workers”.
He added that what was definite was the spiral effect of inflationary pressure on the prices of goods caused by such a revision although “to what extent remains to be seen”.
“Honestly, I cannot see the rationale for standardising the minimum wage nationwide given the fact that we have varying standards of costs of living in different parts of the country.
“The spending power of RM1,100 in Klang Valley is definitely incomparable with that of most small towns in East Malaysia,” he argued.
Chai is of the view that the revised minimum wage would not affect the businesses in places like the Klang Valley, Selangor, Penang, Johor as their living standards are comparatively higher and labour markets in those areas are vibrant.
“But such revised rate would, however, hit the business sector in East Malaysia hard.
“I feel the government should consider the relatively more expensive materials for the manufacturers here after taking into the transportation costs. This being the case, the standardised minimum wage will make products from Sarawak less competitive,” he said.
“Similarly, it will also dampen employment opportunities. Employers will be slow in getting additional staff as the new minimum wage has increased the cost of business operation especially under the prevailing deteriorating economy.
“Those corporate giants with ample resources are more likely to expedite their automated process of production in order to cut costs in the long run,” he added.
However, he said, the minimum wage increase does have its positive side.
“It’s time for our local businesses to capitalise on the incentives totalling RM210 million provided by the government in 2019 Budget.”
According to him, it was their chance to upgrade business operation in the Industry 4.0 transition to remain relevant and competitive in the face of globalisation.
“But personally, I think what worries most local businesses is the plan to eventually revise the minimum wage rate to RM1,500 as pledged by the Pakatan Harapan (PH) government in its election manifesto in GE 14.
“Ideally, I think there should not be any further drastic change in the minimum wage at least for the next couple of years in anticipation of the challenging and deteriorating economy.
“In addition, the minimum wage should be regionalised and sectorial, having regards to the different costs of living in different areas and different levels of expectations from employees in different sectors of employment.
On another note, Chai hoped that a representative from SBF would be appointed to the National Wage Council. He said this would ensure that the state’s business sector is better represented and the views of the local business community effectively channelled.
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