Human Resources Minister Datuk Seri M. Saravanan has reminded that the minimum wage of RM1,500 a month is only on the basic salary and it does not include allowances and overtime.
He said this when asked by The Star on whether overtime and other allowances are taken into account.
Meanwhile, SME Association of Malaysia president Ding Hong Sing said that over 90% of Malaysians employed by SMEs are already receiving over RM1,500 a month if allowances and others are taken into account.
Ding added that employers might resort to slashing their employees’ allowances now that the basic wage rate had increased, as allowances are a form of incentives due to their low wage rate.
However, he said that some employers would not mind raising the wage rate, inclusive of allowances, up to RM2,500 if employees perform well and if employers can afford it.
“Foreign workers are getting RM1,200 because we have to provide them with accommodation, pay the levy and Foreign Workers’ Medical Examination Screening System medical check-ups. When you include all that, it is more than RM1,500,” said Ding.
He then said that the implementation of the new minimum wage would lead to another round of price hikes in goods and services as employers’ costs would increase.
“Prices of goods will increase by 15% to 30%,” he said, adding that it could be as soon as this month.
“There is no choice because the salary has increased by 25% (from the previous minimum wage of RM1,200) while in rural areas it is 36%.”
Ding also said that employers who could not afford to pay their employees a basic salary of RM1,500 might resort to downsizing their manpower or shut down for good in the worst-case.
“Those who can survive will increase the prices of their goods,” he said.
The new minimum wage of RM1,500 came into effect on 1 May and it is applicable for employers with 5 or more staff members and are classified under the Malaysia Standard Classification of Occupations list which is published by the Human Resources Ministry.
Employers with fewer than 5 employees can maintain the previous minimum wage of RM1,200 until year-end, and start with the new minimum wage next year.