PETALING JAYA: The government will have to review how the consumer price index (CPI) is measured before deciding on a new minimum wage for 2021, the Malaysian Employers Federation (MEF) said yesterday.

Its executive director Datuk Shamsuddin Bardan said the CPI is expected to rise by 2% annually but essential goods remain expensive.

“The inflation rate is not reflective of the real increase in cost of living,” he told theSun.

The CPI review must consider the inflation rate, poverty line index, productivity growth, and the ability of employers to cope with price increases, he added.

“From the employers’ point of view, the increase in minimum wage benefits foreign workers more,” Shamsuddin said.

“There are about two million employees earning RM2,000 or less per month. We have more than two million legal foreign workers in Malaysia. The amount of remittance saw a huge increase when the minimum wage was reviewed.

“Before the minimum wage was introduced in 2013, foreign workers remitted about RM18 billion per year, but currently, they are remitting more than RM34 billion.

“This means most of their earnings are sent abroad. It is a loss for the local economy. We need to retain more money within the country to generate economic growth.”

Asli Centre of Public Policy Studies chairman and economist Tan Sri Ramon Navaratnam said the National Wages Consultative Council has to conduct townhall sessions and communicate with the public about the minimum wage.

“There’s not enough open discussion on minimum wage,” he said.

“It should be adjusted through the council to bring it up to living wage (level). Wages should be reviewed every two to four years to keep the B40 group reasonably comfortable and sustainable above a realistic poverty line.

“The time has come to restructure the economy and related policies, and act fast to improve further as social stability can be affected adversely.”

The CPI measures the average prices of a basket of consumer goods and services, such as transportation, food and medical care.

It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Under the National Wage Consultative Council Act 2011 (Act 732), minimum wage is reviewed every two years. The current minimum wage is RM1,100.