Malaysia to implement new minimum wage in July

As promised in the nation's Budget 2016, Malaysia's Human Resources Minister Datuk Seri Richard Riot has announced the nation's Minimum Wages Order 2016 (MWO 2016).

The new wages will come into effect July 1 this year.

Posting the order on the Ministry of Human Resources' website, Riot revealed the minimum wages set were according to region, namely RM1,000 per month or RM4.81 per hour for Peninsular Malaysia, and RM920 per month or RM4.42 per hour for Sabah, Sarawak and Labuan.

As for the daily minimum wage rate, it is subject to a maximum of 48 hours per week, which means in the peninsula, for a six-day working week (48 hours), the daily minimum wage rate is RM38.46, five days/week at RM46.15, and four days/week at RM57.69.

In Sabah, Sarawak and Labuan, for a six-day working week the daily minimum wage rate is RM35.38, five days/week at RM42.46, and four days/week at RM53.08, the MWO stated.

In an article by The Malay Mail Online, the minister said the order would involve all employees in the private sector, regardless of the number of employees they have, except domestic helpers (maids).

"The government has reviewed all recommendations submitted by the National Wages Consultative Council (NWCC), and has taken a balanced approach and considered the interests of both employers and employees (before issuing the order)," he said.

Reports have already started emerging on the implications of these new minimum wages - with some not as encouraging of the figures as others.

The Malaysian Employers Federation (MEF), for example, hopes the government will postpone the MWO 2016, as reported by Bernama.

Its executive director, Shamsuddin Bardan, said about 30,000 employees, especially at lower level, may be retrenched if MWO 2016 was enforced.

“Employers have to bear a high cost if MWO 2016 is enforced and will retrench workers before July to reduce operating cost and retrenchment benefits,” he told Bernama.

Shamsuddin said the workers to be retrenched come from sectors such as oil and gas, banking and finance, insurance and retail.

"Hypermarkets have seen a big drop in turnover and some of them may have retrenched their workers via voluntary retrenchment.

"This situation is worrying and the government should help local companies to survive during difficult times and to retain employees."

On the other hand, Bernama added that Malaysian Trades Union Congress (MTUC) secretary-general N. Gopal Kishnam was confident MWO 2016 would not burden employers as the salary increase was not that high.

"The probability of retrenchment or even closure of business because of rising labour costs is small. Employers have to resort to such action only when the economic situation really deteriorated," he told Bernama.

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