MEF: EA Amendments Will Cost Businesses RM111 Billion Yearly

The Malaysian Employers Federation (MEF) has called on the government to postpone enforcing the Employment Act 1995 (EA) amendments beginning on September 1, which it believes will cost employers across the country an additional RM110.99 billion annually.

Should the government reconsider implementing the amendments?

The federation's president, Datuk Dr Syed Hussain Syed Husman, stated in a statement that economic growth is anticipated to decrease to between 5% and 6% in the second half of the year from the 8.9% observed in the second quarter.

He suggested that the administration should reconsider enforcing the amendments, given the looming economic challenges.

"Employers should be given time to reconsolidate and recover their businesses," he said, noting that the movement control orders put in place in 2020 and 2021 to stop the spread of Covid-19had a significant impact on them.

He continued by saying that some businesses were already having trouble fully implementing the new RM1,500 monthly minimum wage, which went into effect in May and was expected to cost them an extra RM14 billion annually.

"Employers generally try to comply with the statutory requirements, but there have been instances where they have acknowledged that they do not have the financial capacity to do so," he said.

He noted that employers would find it difficult to bear the additional RM110.99 billion cost per year if the Russia-Ukraine war and the supply chain issues from the pandemic remain to agitate global markets.

Crunching the numbers

The MEF has derived the extra RM110.99 billion from the following:

Costs for overtime rose from RM2,000 per month to RM4,000 per month (RM80.87 billion)
Lowering the number of hours worked per week from 48 to 45 (RM26.88 billion)
Increasing the length of maternity leave from 60 to 98 days (RM2.97 billion)
Seven days of continuous paternity leave for each birth (RM275 million)

The federation said that in addition to the increased costs, employers would have to deal with other changes such as:

Flexible work arrangements (FWA),
60 days of additional annual sick leave for hospitalisation, and
New procedures for applying for foreign workers, including acquiring the director general of labour's approval.

Since no official guidelines have been issued, most companies are still unaware of FWA, it stated.

MEF said that the Trade Unions (Amendment) Bill 2022, which permits more than one union in a workplace, and the newly proposed methods for recognising unions and the formula to be applied for recognition under Industrial Relations Act 1967, may have an impact on companies.

"There were too many changes taking place affecting business during the challenging periods. MEF appeals to the government to give more time to businesses to transition themselves to the new requirements.

MEF endorses some of the changes, however, the problem is with the timing. Syed Hussein stated that now is not the time to make changes that will increase the cost of doing business.

Source: The Edge Markets