RM1,500 minimum wage may cause more companies to shut down

SHAH ALAM - The minimum monthly wage which was set at RM1,500 by the end of the year, will likely cause more companies and entrepreneurs to go bankrupt and subsequently cease business operations.

Universiti Tun Abdul Razak (UniRazak) economic expert Professor Dr Barjoyai Bardai said among those who would benefit from the implementation of the minimum wage were workers in the unskilled sectors and factory operators.

According to Barjayoi, there were about 1.5 million workers in Malaysia in the unskilled sectors while 1.8 million were factory operators and they will be receiving a minimum salary of RM1,500.

However, he said, there were 5,500 employers in the country and most of them were entrepreneurs of small, medium and micro enterprises (SMEs).

“So, by paying minimum wage to the workers, their overhead cost will increase immediately and this will make their businesses non-viable.

“It is possible that entrepreneurs will have to close their shops or transfer the costs to customers in a form of price hikes,” he said.

He said this during a talk show called ‘Gaji Minimum di Malaysia: Apa Kesudahannya?’ (Minimum wage in Malaysia: What is the outcome?) which was broadcasted live on the National Professors Council (MPN) Facebook on Tuesday.

Commenting further on the country's productivity, he said, the value of the productivity rate, last year, was RM89,000, which went down 5.5 per cent from the year before.

He added that the productivity rate in the country has only changed slightly, which was in the maximum range of four per cent between five to 10 years and it did not have much of an impact on the changes in wages.

“Why are we not able to increase the productivity rate? The World Bank in the 2021 report stated that Malaysia will once again fail to achieve the level of a developed country although the target has changed to 2028.

“If they are not able to address the issue of the middle class groups which is tangled up due to productivity, how are they supposed get out of the problem?,” he said.

Therefore, he urged the government as well as employers and workers to come up with plan to enhance productivity which is through technology.

Meanwhile, MPN president Professor Datuk Dr Raduan Che Rose said Malaysia too wanted to become like 150 other countries in the world to implement minimum wage.

“We established the National Wage Consultative Council which has been enacted and this needs to be looked into as they are responsible to make recommendations to the government regarding the issue.

“The concept of minimum wage is closely related to the living cost of the people in a family institution,” he said.

He also added that as a country that aims to become a developed country, to achieve the title, the position of employees in Malaysia needed to be at a standard level.