KUCHING: Increasing the minimum wage without examining the underlining problems and cause of low minimum income will not be a sustainable and viable solution to bring the prices of goods down.
Sarawak Housing and Real Estate Developers’ Association (SHEDA) president Augustine Wong said in a press statement here on Sunday (Feb 6) that this was based on previous experiences.
“Based on previous experiences, minimum wage hikes have proven to cause prices of goods to rise.
“The objective of raising the minimum wage with the hope that it will increase the spending power of workers via higher wages that will stimulate the economy might even give rise to an opposite effect,” he said.
Wong added that lower and middle income households tend to spend a larger percentage of their income on consummable goods the prices of which unfortunately would have increased as a result.
“Government mandated minimum wage could also negatively impact employment levels. The negative of higher minimum wage can only be offset by an increase in productivity by workers or having companies trim down their manpower,” he said.
He added that some employers are forced to pay more in wages hence will end up hiring fewer workers which eventually will lead to higher unemployment.
Meanwhile, workers who are perhaps willing to work for lower wages are now denied work opportunities as a result of a government mandated minimum wage, Wong stressed.
He said that policy makers should examine the underlining economic issues such as how to reduce cost of doing business by reduce red tape, increase efficiency and promote productivity – which can ensure Malaysia remains competitive globally for exports and as an investment destination.
This, Wong said, in the end will not only improve the real purchasing power of the lower middle income group workers but increase the income of all strata of society.
“Otherwise, wage increase will only result in another round of inflation where minimum wage earners lose their jobs while their cost of living still increases,” he said.
Similarly, according to SHEDA’S executive secretary Angie Kueh this was basically telling the government to have a reality check on policy.
“Raising the wage is useless if it cannot increase the purchasing power,” she said.
