KUCHING: Raising the minimum wage is likely to increase the cost of goods as businesses often pass on the additional costs to their consumers.
Sarawak Business Federation (SBF) secretary-general Datuk Jonathan Chai said this would not make any difference to the low-income earners as their spending power would be reduced as well.
Thus, he felt hat the original intention of raising the standard of living of the workers by raising the minimum wage from RM1,200 to RM1,500 would probably not be achieved with everything else getting more expensive.
“They are getting more (salary) but they are spending more too as things are getting more expensive. It’s just going back to square one,” he said.
Speaking to New Sarawak Tribune, Chai believed that most employers would not mind to give their employees a better and higher pay if their business is sustainable and profitable; bearing in mind that the labour market is very much driven by the forces of demand and supply.
However, he said, if the business could not be sustained because of the rising statutory minimum wage, then the end result would be the closure of business and the loss of employment opportunities.
“The government should realise that any upward adjustment of wages must be coupled with an increase in productivity of the employees.
“If such a balance could not be achieved, the government would have to step in to shoulder part of the increment if we want to provide better welfare to our workers without hurting the business sector,” he said.
Chai said it was sad that the wages received by the blue-collar workers in urban areas, especially those in the Klang Valley, are hardly sufficient to make their ends meet.
“Indeed, I empathise with their hardship, especially when we are all trying hard to cope with the rising cost of living.
“Having said that, we also have to understand the dilemma of the employers having to deal with the rising costs of doing business in this country.
“The minimum wage was revised from RM1,200 to RM1,500 last year and is expected to be further increased in the next couple of years,” he said.
Chai said some businesses, especially the small and medium enterprises (SMEs) in the rural area as well as those conventional grocery stores and coffee shops, were not in a position to implement the new minimum wage because of their scale of operation and the margin of profit of the business.
“Above all, they are still reeling from the economic shock brought about by the Covid-19 and current geo-political issues such as the Russia-Ukraine conflict,” he said.
Accordingly, some workers might have to be retrenched and unemployment rate in the country is expected to go up as a result.
On Monday (May 1), Prime Minister Datuk Seri Anwar Ibrahim admitted that the implementation of the minimum wage came with difficulties and promised that it would resolve it once and for once in the cabinet meeting next month.
The government had decided to defer the implementation of an RM1,500 minimum wage for businesses with fewer than five workers until next July 1, which was initially set to take effect on Jan 1 this year.
The decision was made by the government after taking into account the readiness of employers in the category to enforce the new minimum wage for their employees.
