Minimum wage plan sparks fight between unions and employers

MALAYSIA: A planned increase in the national minimum wage has employers and unions in the state of Sarawak at each other's throats.

National Human Resources Minister Datuk Seri M Saravanan recently announced a new monthly minimum wage of MYR 1,500 (USD 358). This represents a 25% increase on the current minimum wage of MYR 1200 per month. While the increased level has yet to be finalised, the government hopes to take advice from all stakeholders and implement the change by the end of this year.

The debate in Sarawak kicked off when Sarawak Housing and Real Estate Developers' Association President Augustine Wong Chung Ho commented that he would likely reduce his business' hiring under a higher minimum wage, and that could translate to a significantly higher unemployment rate if employers across the country had the same response.

High salaries would raise production costs across the economy, and effectively also raise the prices of commodities.

Andrew Lo, secretary of the Malaysian Trades Union Congress in Sarawak, disagreed. He said employment levels would likely be maintained, and the higher minimum wage for locals could even reduce Malaysia's dependency on foreign workers.

"Malaysia has fallen behind Singapore, Hong Kong, and Taiwan as well as South Korea mainly due to antiquated views of businesses," Lo stated. "We will soon fall behind Vietnam, Indonesia, and the Philippines."

Lo further noted that lower income demographics typically spent most of their incomes on consumer goods. Increasing the minimum wage could therefore be a boost to the economy through increased spending on local products by local businesses, including small to medium enterprises.

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