KUALA LUMPUR: It is untimely for the private sector to set monthly RM1,500 minimum wage now as it would take them about two years to financially rebound from the Covid-19 pandemic.
Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman said raising the minimum wage from the current RM1,200 spelt an increase in operational costs of between 25 and 36 per cent for private companies.
He said the raise in wages, including the minimum rate, could only be done when a business had fully recovered and the country does not have unemployment issues.
"We worry that fixing a higher minimum wage at this time will jeopardise the efforts of employers in the private sector to revive their businesses which have been badly affected by the pandemic as well as the recent massive floods.
"As we all know, 2020 and 2021 were challenging periods for the country and private sector employers. Any raise in minimum wages now will increase the operational costs of employers.
"This will further worsen their predicament as their profits have dropped between 20 and 60 per cent and at the same time, it is hard to trim down operational costs.
"This has forced them to take drastic actions such as the freezing of annual raises, bonuses, recruitment, enforcing pay cuts, and if they have no choice, retrenchment," he told the New Straits Times today.
Syed Hussain was responding to Prime Minister Datuk Seri Ismail Sabri Yaakob's call for the private sector to emulate the government's move to ensure all civil servants, including permanent staff of government linked companies (GLC) and government linked investment companies (GLIC) receive a total pay and allowance of at least RM1,500 a month.
Ismail Sabri had said this was to assist workers deal with the challenges of rising living costs, particularly low income workers.
Syed Hussain said private companies facing financial stress were also dependent on government's aid, including the Wage Subsidy Programme, which had helped over 533,000 employers retain 5.3 million workers.
"MEF feels that employers ought to be given assistance to restore their business, which in turn, will help the government by creating full time jobs and reduce unemployment rate.
"We hope that when the situation has returned to normal, then only will discussions to raise the minimum wages take place. This will take at least two years," he said.
He opined that the payment of salary in the private sector was based on an employer's financial ability while GLC and GLIC boast strong financial positions.
"Therefore, the commitment by the prime minister of a RM1,500 monthly is well within the GLC and GLIC financial ability and would not incur negative consequences towards their operational costs and financial positions," he said.
Some private companies with strong financial position and ability had recently, at their discretion, raised the salaries of their staff to RM1,400 and RM1,500 from RM1,200, he added.