Malaysia has deferred the implementation of the RM1,500 minimum wage for employers with less than five employees. Human Resources Minister V. Sivakumar said employers who have less than five employees will only have to start paying a higher minimum wage of RM1,500 from July 2023, instead of the earlier scheduled start date of January 1, 2023. He said this decision was made after considering the views of various stakeholders who are expected to face economic and financial challenges next year. The new minimum wage of RM1,500 had already been implemented nationwide from May 1, 2022 for employers who employed five workers or more, while those with less than five staff members were given an exemption and would initially have to start paying the higher rate from January 1, 2023. He hopes that the deferment of six months would provide a chance to coordinate and balance financial needs and to help restore the economic position of companies with less than five workers.
In an immediate response to the move, the Small and Medium Enterprise Association (SAMENTA) welcomes the extension for smaller SMEs. SAMENTA Chairman Datuk William Ng said this would primarily help micro and small SMEs and support their recovery. He added that SAMENTA has always called for wages to be determined by the market, so as to minimise the distortion to labour productivity. “Ideally, wages should be tied to productivity and output – which would allow employees who are most productive to receive far more. This concept is already practiced in the gig economy, for example the p-hailing industry, so there is really no reason to continue the post-Merdeka era practice of setting a national minimum wage.” “It is a continued misconception that most SMEs underpay. In fact, some of our members are paying above market rate; yet are unable to attract talents. The issues we should be focused on is to stem the talent emigration, narrow the skills-mismatch and raise the productivity of employers and employees.”
The Malaysian Employers Federation (MEF) also welcomed the move. MEF president Datuk Dr Syed Hussain Syed Husman said businesses are expected to face a challenging time in 2023, especially micro-enterprises which typically employ fewer than five people. “The number of such enterprises is estimated to be about 560,000. The deferment of the RM1,500 minimum wage to July will allow them to focus on building their business and cash flow,” he said in a statement. Syed Hussain said MEF is optimistic that once businesses are on a stable footing, the employers concerned will honour the minimum wage requirement.
The Malaysian Trades Union Congress (MTUC) meanwhile, slammed the government’s move.
MTUC president Effendy Abdul Ghani said the government should have gone ahead with the measure on January 1 as promised and open applications for minimum wage subsidies for companies struggling with higher wage bills. He added that MTUC was shocked with the announcement and that MTUC was not consulted.
