MEF: Minimum Wage Hike Will Only Help Foreign Workers

According to the Malaysian Employers Federation (MEF), raising the minimum wage from RM1,200 to RM1,500 will solely benefit foreign employees in the nation.

 

Foreign workers prefer to send their money back to their countries?

That is because foreign workers would return the 'surplus' of their salaries to their home countries rather than spending them here, according to MEF executive director Datuk Shamsuddin Bardan, and hence would not contribute to Malaysia's economic growth.

"Many have suggested that raising the minimum wage would be beneficial to Malaysians. However, this is incorrect because the minimum wage is just for individuals who work in low-paid jobs.

"According to a 2018 study on the impact of the minimum wage hike, nearly 1.8 million workers profited from it."

"At the time, we had over two million foreign workers, and they were the ones who profited from the increase in the minimum wage."

"Did they use their 'surplus' funds to help the economy of the country?" The answer is no because the foreign workers sent the money back to their home nations," he explained.

According to Shamsuddin, foreign workers in Malaysia presently remit roughly RM34 billion to their home countries through official routes, with the sum potentially rising to RM70 billion through unofficial means.

He stated that if they spent the money in Malaysia, it would help stimulate the economy.

 

Minimum wage increase will lead to price hikes?

According to MEF calculations, for every RM100 rise in minimum wages, foreign workers would send back an extra RM4 billion each year.

"If we raise the minimum wage to RM1,500, there'll be another increase between RM12 billion and RM16 billion."

According to Shamsuddin, the proposed hike can be deemed high, given that neighbouring nations such as Indonesia and Cambodia have implemented minimum wage adjustments of one to 1.5%.

With the current Covid-19 outbreak and recent floods, he believes an immediate rise to RM1,500 will affect both companies and employees.

"Will employers be prepared to afford RM1,500 if the government determines that the new minimum wage is not a choice?"

He also voiced concern that if the proposal were to become reality, it would result in higher living costs as employers' additional costs would have to be passed on to consumers.

Shamsuddin's sentiments were echoed by Barjoyai, who stated that increasing the minimum wage would raise the overhead costs of business operations.

"It renders businesses unviable, leading to the closure of businesses or passing on the costs to consumers through price hikes."

He believes it is best not to hurry salary increases.

"In my view, this proposal requires further study. Perhaps we can come up with alternative ideas besides raising the minimum wage."

 

Datuk Seri M Saravanan, Minister of Human Resources, previously said that a revised minimum salary of RM1,500 will be introduced by the end of the year.

He did say that the amount was still being finalised and that it was awaiting cabinet clearance.

The Malaysian Trades Union Congress had previously recommended the government to boost the monthly minimum pay from RM1,200 to RM1,500 and provide all employees with an RM300 cost of living allowance.

In February 2020, Malaysia's minimum salary was increased from RM1,100 to RM1,200.

 

Source: NST