SMEs want labour law reform before increasing wages

MALAYSIA: The country's small business lobby has urged the national government to undertake significant labour reforms, in addition to increasing the minimum wage.

Small and Medium Enterprises Association of Malaysia (Samenta) chairman Datuk William Ng stated that the group was not opposed to Minister Datuk Seri M Saravanan’s planned increase in the minimum wage to around MYR 1,500, but wanted the government to align it with the country’s economic status.

Ng noted that the country’s labour productivity declined by 5.6% in the third quarter of 2021.

The chairman urged the ministry to focus on reforming the country’s labour laws, considering the gig economy, and a new post-pandemic setup.

“The way forward for Malaysia and our workforce is to link income to productivity," he said. "The Productivity-Linked Wage System, which counts the Ministry of Human Resources as among its champions, is seeing a lot of interest among businesses, including SMEs.

"However, our labour laws, are still time-based, meaning that any attempt at implementing (this) would have to be on top of a time-based monthly salary, and not instead of it,” Ng stressed.

“In more developed countries, such as Australia, it is common for employees to be paid based on output. Housekeepers in hotels, for example, are paid for rooms cleaned, rather than hours worked. When occupancy is high, the employees make substantially more and hence gain a larger share of the business' prosperity.”

Ng pointed out that local riders in the ride-hailing industry were paid mainly by jobs delivered instead of the work hours rendered, and the scheme has been successful.

“The interests of both businesses and working Malaysians are best served when income(s) are tied to productivity, rather than a minimum wage premised upon workers working a fixed number of hours,” he added.

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