MINIMUM WAGE SALARYMalaysia – A new minimum wage policy will likely be announced in Malaysia next month, affecting an estimated 3.2 million workers in the private sector.
According to
The New Straits Times, the proposed minimum wage of between RM800 (S$333) and RM1,000 (S$416) will be brought to cabinet for approval in two weeks, bringing an end to the two-year discussion.
The median wage policy will be established in stages, with a grace period given to employers to restructure their wage schemes once the new minimum wage is implemented. This will be reviewed once every two years, Datuk Seri Dr S. Subramaniam, human resources minister, said.
Currently, close to 33% of workers in the private sector are said to be earning less than RM700 (S$291) a month, which is below the poverty line.
“The reason for this policy is because over the past 10 years, there had been an increase of only 2.6% per year, and we were lagging behind other countries that have set a minimum wage standard,” he added. “We are now looking at streamlining the rate of our wages while bridging the gap of those who are living below the poverty line.”
New rates will have a large impact in Sabah and Sarawak, where workers earn an average salary of RM577 (S$240) and RM758 (S$315) respectively. In the peninsula, the average minimum wage is RM1,131 (S$471). The varying average salaries between Sabah and Sarawak and the peninsula may see different minimum rates among the three groups, Dr Subramaniam said.
“Once the disparity in the average salary lessens, a review will be made to streamline the minimum wage,” he added. Once the proposed rate is implemented, employers will see a minor increase in operation costs, but this would have little effect on their total expenditure. Those who fail to comply will risk a maximum fine of RM10,000 (S$4,161) per worker.
However, some sectors will be excluded from the policy as wage structure.
Dr Subramaniam explained the wage structure was proposed after taking into account studies by the World Bank, which included factors such as the cost of living, poverty line index, median range, productivity and unemployment rate.
“The rate we are trying to propose is based on a formula that takes into consideration all these factors and will not affect the industries and productivity or increase unemployment,” he said. “If we keep the wage between RM800 and RM1,000, it will not have any negative impact on drawing investments, but if it goes above RM1,000, then it may cause a negative impact on the economy.”
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