Wage increase must be accompanied by rise in productivity: SME association

SME Association of Malaysia president Michael Kang says increasing the minimum wage to RM1,500 a month is viable only if productivity is raised in tandem and that the government helps small and medium entrepreneurs (SMEs) automate their production, as well as provide training to upskill workers.
Kang told Nanyang Siang Pau this over the weekend when asked to comment on the government's intention to raise the minimum wage of workers to RM1,500.
Currently the minimum wage is RM1,000 in Peninsular Malaysia, and RM920 in Sabah, Sarawak and Labuan.
Raising the minimum wage alone will result in higher prices of goods, he said, adding that the only way to offset the higher cost of production is to raise productivity.
"For example, work that requires 50 workers to complete may need only a staff of 10 with automation, allowing the wages to be increased as a result of higher productivity and lowered production cost," he said.
Providing upskill training to workers will make SMEs more competitive, he said, adding that local enterprises are unable to afford better pay for their workers all this while due to their low productivity.
"The government has promised to gradually (over five years) increase the minimum wage to RM1,500. It's not an immediate hike, as such what needs to be done now is for the government to sit down with stakeholders to relook and reset the ground rules on human resource (procurement)," he said.
Kang emphasised the need to invest in human capital, raise workers' skills and productivity as well as to move from labour-intensive production to automation in order to speed up the country's economic development.
He admitted that due to the shortage of domestic labour, the plantation industry is still dependent on foreign workers.
He said as far as he knew, most workers in the plantation industry are paid more than RM1,000 a month.
"Some of them are getting even more than RM1,500 a month," he added.