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Minimum wage: FMM urges progressive adjustment instead of lump-sum increase

FMM In The News: NEW STRAITS TIMES, KUALA LUMPUR, Monday, March 21, 2022 - Manufacturers nationwide are urging the government to opt for a "progressive adjustment" to the minimum wage, instead of raising it to RM1,500 on May 1.

Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said FMM had proposed to increase the minimum wage by RM100 in the third quarter of 2022, followed by subsequent adjustments in 2023 and 2024 to reach RM1,500.  

"The increase from the current minimum wage rate of RM1,200 to RM1,500 represents an immediate increase of 25 per cent on the basic salary.  

"This will have a knock-on effect to the overall payroll cost and have a spiralling impact on business cost and could potentially derail a business and economic recovery.  

"Based on the findings of the recent FMM-MIER Business Conditions Survey 2H2021 which was conducted between Jan 5 and Feb 10, the majority of the survey respondents opined that RM100 increase in the minimum wages is acceptable, given the current economic conditions.  

"So, FMM is deeply disappointed that our call for a progressive adjustment to the minimum wage under the current business conditions has not been considered," he said in a statement.  

During his winding speech at the Umno General Assembly on Saturday, Prime Minister Datuk Seri Ismail Sabri Yaakob announced that the minimum wage will be raised to RM1,500 for private companies with at least five employees, effective May 1.  

However, he had said the Human Resources Ministry and the Entrepreneur Development and Cooperative Ministry would discuss the possibility of exempting micro, small and medium enterprises (MSMEs) from implementing the new minimum wage.  

However, Soh said the exemption makes very little difference for manufacturers nationwide.  

"Within FMM's membership, only less than two per cent of our members would be exempted. The majority of our members will still be impacted.  

"Small and medium enterprises, with up to 200 employees, will not be spared and a steep increase in the minimum wage would have an undesirable impact on their business recovery," he said.  

Since the minimum wage hike would also apply to foreign workers, Soh said a minimum wage of RM1,500 would lead to an additional outflow of almost RM2 billion annually since Malaysia currently has 1.6 million legal foreign workers.  

"We strongly feel that a more gradual increase in the wage rate would still be able to address the increase in the cost of living, that resulted from the Covid-19 pandemic and the supply disruptions that ensued.  

"In addition, employers continue to plan for salary increments in 2022 and this would further address the cost of living pressures.  

"FMM strongly believes that with necessary controls on cost increases in place by the government and concerted efforts by the industry to defray cost increase internally, employers can continue to maintain employment and wage adjustments," he added.

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