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Manufacturers welcome minimum wage hike, but say govt must contribute 50% — FMM survey

FMM in the News: The Edge Markets, August 23, 2018

KUALA LUMPUR : A majority of manufacturers welcome the proposal for a higher minimum wage — provided the new government sticks to its promise to share 50% of the increase with employers, the Federation of Manufacturers Malaysia (FMM) said today.

"This is [Pakatan Harapan's] promise [in its 14th General Election manifesto], and I believe they should honour it," said FMM president Datuk Soh Thian Lai after presenting the findings from the FMM-MIER joint business conditions survey for 2H18.

Soh was referring to Pakatan's pledge to normalise minimum wages between business sectors and geographical locations, and gradually increase it to RM1,500 in its first five-year term as federal government.  In FMM's latest survey, 62% respondents agreed with the pledge.

If the government upholds its promise to share the load, 84% of respondents in the manufacturing community agree that the minimum wage should be gradually raised beginning 2019, with 44% open for a hike to RM1,200 in the first year.

Meanwhile, Soh also called for the new government to include performance-based incentives and allowances into the calculation of the minimum wage, from just basic pay presently.

This is to ensure a uniform practice among players, he said. At present, certain companies include performance incentives as part of minimum wage, and vice versa.

"The National Wage Consultative Council (NWCC) Act under Section 23 [says that] they can recommend to the government to derive minimum wage from total wage — not basic wage," said Soh.

"It should be in line with the Employment Act, 1955, Section 2," said Soh, who argued that the act did not exclude performance-based incentives such as attendance incentive from its definition of wages.

"We would like for the new government to please be fair and to clearly rectify the definition of 'minimum wage'. We are not objecting, what we want is for productivity-linked minimum wage," he said.

In the Employment Act, wages is defined as 'basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service'.

It excludes approved amenity such as accommodation or medical attendance, employer contribution to employee funds and schemes, travelling allowance, special expenses, payable gratuity, and annual bonus.

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