PETALING JAYA: Employers want the government to reconsider the decision to increase the minimum wage to RM1,500 from May, and instead allow a gradual hike.

The Malaysian Employers Federation said while it supported the hike in minimum wage for Malaysian workers, it wants the move to be implemented gradually.

“A sudden increase of between 25% and 36% will put a lot of financial pressure on businesses, especially as most are trying to rebuild after being hit by Covid-19 and major floods” said its president, Datuk Dr Syed Hussain Syed Husman, in a statement.

“Private sector employers urgently require government intervention to mitigate the increasing cost of doing business to ensure sustainability, and assist the government to create more jobs and stabilise the labour market.

“There are many details that need to be discussed with stakeholders before the RM1,500 minimum wage is implemented.

“Currently many stakeholders are still in the dark on the details of the new minimum wage implementation. Further, the National Wages Consultative Council meeting is scheduled for March 24, and any announcement on the details of the RM1,500 minimum wage is premature before issues are discussed at the meeting.”

Small and Medium Enterprises Association of Malaysia (Samenta) secretary-general Yeoh Seng Hooi said its members are concerned about the sharp hike in the minimum wage.

“Small and medium enterprises (SME) are currently facing a perfect storm of challenges in the form of rising material costs, supply chain disruptions, inflationary pressures and global economic uncertainties. Many SME are still reeling from the impact of Covid.

“Our proposal to the government is a two-step strategy, that micro-businesses be exempted for a year and the minimum wage increase should only take effect on May 1 next year.

“Small businesses should start with the minimum wage increasing to RM1,350 from May 1 for a year and then to RM1,500 the following year, while medium businesses should start with RM1,350 and then to RM1,500 from Nov 1.”

Samenta South chairman Dr Louis Ooi said most SME are still in the recovery phase from Covid-19, especially the tourism industry.

“With the opening of international borders soon, the tourism industry could find it difficult to cushion rising operating costs while expecting an influx of tourists into our country.

“Mathematically, a 25% salary increment will require an additional 1.25 times the revenue to cover the rate of salary increment. Otherwise, SME may pass on the cost to customers, affecting our country’s inflation rate.”

He expressed hope that the minimum wage increase would be postponed to the end of this year, giving SME more time to increase productivity in stages.

There are many details that need to be discussed with stakeholders before the RM1,500 minimum wage is implemented, according to Syed Hussain.