Employers face minimum wage squeeze

PETALING JAYA: The new minimum wage, coming on the heels of a credit squeeze, has employers in various sectors bracing for tougher times ahead.
Many of them lament the measure is not timely and Federation of Malaysian Employers executive director Datuk Shamsuddin Bardan said more than 70,000 employees face the grim prospect of being laid off this year by employers fighting to stay afloat, Oriental Daily News reported today.
Under the new order on minimum wage policy effective today, the monthly minimum wage will increase from RM900 to RM1,000 for Peninsular Malaysia and from RM800 to RM920 for Sarawak, Sabah and Labuan.
Shamsuddin said the upward revision will pile pressure on employers who are already facing the problem of increased operational costs.
For example, he said, an employer in Peninsular Malaysia will have to cough up 11% more on salary alone for each affected employee, or 15% more if EPF, Socso, overtime are taken into account.
He said some employers had retrenched some employees ahead of the implementation of the new minimum wage order to offset the anticipated increase in operational expenses.
Shamsuddin disclosed that many employers were already having problems absorbing the additional cost when the minimum wage was introduced in 2012 as the wages for employees in many rural areas in the Peninsular were lower than RM900.
Now with the minimum wage increasing to RM1,000, many employers, especially those operating small businesses, will find it hard to survive.
In an interview with the daily, he agreed that the time is not ripe to raise the minimum wage.
"Last year, some 38,000 workers were retrenched. The numbers are expected to double this year," he lamented.