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Minimum wage will not impact retrenchment rate in Malaysia

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Malaysia’s deputy HR Minister Datuk Seri Ismail Abd Muttalib has stated that the implementation of the new minimum wage will have no impact on the local retrenchment rate, according to New Straits Times.

He was reported to be saying that employers should not view the minimum wage increase negatively as higher wages would motivate workers and help improve productivity which would benefit the companies.

“The implementation of the minimum wage does not have a direct impact on the retrenchment rate in Malaysia. Retrenchments are more likely to be caused by the rising cost of material and global market competition,” he said.

He explained a total of 33,086 workers were retrenched (including through voluntary separation scheme) in 2013; 25,917 in 2014; 38,459 in 2015; and 6,534 workers retrenched so far this year.

ALSO READ: Rise in minimum wages, taxes and training funds: Malaysia Budget 2016

He added that of the 92,566 checks done by the ministry so far, 91,316 (99%) of the employers abide by the minimum wage ruling.

The new minimum wage ruling is RM 1,000 for Peninsular Malaysia, up from RM 900, and RM 920 for Sabah, Sarawak and Labuan, up from RM 800, effective July 1st.

Bernama also reported that according to the minister, any dismissal in the country would likely be due to other factors, such as reduced demand for company products.

“Besides, data of the Manpower Department which will enforce the Minimum Wages Order does not show any dismissal of workers following the implementation of the minimum wage.”

Image: 123rf

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