Minimum Wage Delayed for Employers with Fewer Than 5 Workers
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Human Resources Minister V. Sivakumar just announced that employers with fewer than five employees will need to begin paying the new RM1,500 minimum wage from July 2023 instead of the scheduled January 1, 2023.
The minister said they had reached this decision after assessing the opinions of various stakeholders who are anticipated to go through financial and economic challenges in the coming year.
Minimum wage delay
The government has already implemented the new RM1,500 minimum wage nationwide from May 1, 2022, for employers with five workers or more. Meanwhile, it gave employers with fewer than five employees an exemption, and they would initially have to begin paying the new rate from January 1, 2023.
Sivakumar said in a statement that after examining the readiness of employers with fewer than five workers, the government has decided to delay the RM1,500 Minimum Wage enforcement to July 1, 2023, for this category.
The HR minister hoped that the additional delay of six months would allow these employers to balance and coordinate financial needs and help restore the economic position of businesses with fewer than five workers.
However, the Ministry of Human Resources emphasised that companies already required to pay the RM1,500 minimum wage from May 1, 2022, must continue to pay the amount to their employees.
The July 2023 postponement of the RM1,500 minimum wage doesn't apply to them.
The RM1,500 minimum wage is equivalent to RM7.21 per hour. For a daily wage, it translates to:
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RM57.69 for a 6-day workweek,
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RM69.23 for a 5-day workweek, and
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RM86.54 for a 4-day workweek.
These employers will continue to pay the RM1,200 or RM1,100 minimum wage based on their location of employment until the RM1,500 minimum wage rate starts next July.
Who must continue paying RM1,500 minimum wage?
Those who have to continue paying RM1,500 minimum wage are:
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Employers with five or more workers, or
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Employers, regardless of how many workers, are carrying out a professional activity that is classified under Malaysia Standard Classification of Occupations (Masco) as officially published by the Ministry of Human Resources.
MEF welcomes the deferment
Datuk Dr Syed Hussain Syed Husman, the Malaysian Employers Federation (MEF) president, said that companies, particularly micro-enterprises employing fewer than five workers, would encounter challenges in 2023.
In a statement, he said that around 560,000 such businesses are believed to exist and that postponing the RM1,500 minimum wage until July will give them some time to focus on growing their business and cash flow.
According to Syed Hussain, the MEF is optimistic that the employers involved will honour the minimum wage obligation once they are stable.
He explained that employers appreciate their assets, which are their employees and that it is a matter of survival and keeping their businesses alive while retaining employees and strengthening their financial position.
Syed Hussain went on to say that every firm wants to retain experienced employees. He said that a lot of time and money had been invested in developing skills and expertise, and having more companies alive would create more jobs.
The MEF president said Malaysia needs full employment to grow enterprises and the national economy in this challenging moment. He added that the government, employers, and workers should work together to improve the country.
MTUC surprised by another delay
According to Mohd Effendy Abdul Ghani, the Malaysian Trades Union Congress (MTUC) president, the implementation of the minimum wage for businesses with fewer than five employees had already been delayed once, and the government shouldn't have done it so again.
He said the MTUC was taken off guard as it was scheduled to be deployed in just a few days. He noted that the MTUC and many B40 workers found the situation disappointing.
He explained that since the government made the delay in May, small and medium-sized businesses have been aware that the minimum wage for their employees will increase on January 1.
He said employers should have been ready and be aware of this. Since May, they have had eight months to be prepared for this.
Given that these microbusiness employees face the same high cost of living as their counterparts who work for larger corporations, Mohd Effendy characterised the delay as an outrageous act of discrimination against them.
He asserted that because the launch date had previously been gazetted, the administration should have carried it out as scheduled on January 1.
He argued that rather than postponing implementation for another six months, the government should allow businesses with trouble meeting the minimum wage to apply for minimum wage subsidies.
Effendy said that one of the things the government should do to assist small businesses struggling to survive and pay a higher minimum wage to their employees is to provide wage subsidies.
Mohd Effendy stated that, in light of the suspected misuse of the wage subsidy programme during the pandemic, it should also carry out the minimum wage subsidy programme by thoroughly screening enterprises.