Thursday, March 30, 2023

Employers are cutting benefits of employees to cope with new minimum wage

NewsEmployers are cutting benefits of employees to cope with new minimum wage

The minimum wage of RM1,500 was implement since 1 May but some employees in the country are complaining that their benefits were reduced by employers to make up for the increase in wages.

In an interview with The Straits Times, office despatch worker Mohamaed Afran, who earns RM1,280 a month, was over the moon over the RM1,500 minimum wage pay rate but was disappointed at the same time as his employer announced an accompanying cut to his benefits.

“My petrol subsidy has been slashed by RM250. On top of that, my leave has been reduced to 14 days from 18, and my medical benefits are fewer. I’m appalled but I need the job,” he said.

Source: The Edge Markets

Another interviewee, Maria Fernandez, who works as a sales and marketing executive and is earning a basic salary of RM3,500, said that the new RM1,500 rate affects the whole organisation as her employer is also reviewing her benefits.

“My company is… trying to make staff work more days. It expects productivity levels to increase following the ‘added cost’. It’s not fair,” she said.

In March this year, Prime Minister Datuk Seri Ismail Sabri Yaakob announced that the new minimum wage rate of RM1,500 would be implemented from 1 May.

Source: The Rakyat Post

However, the RM1,500 minimum wage rate applies only to employers who have 5 or more employees, and also to employers who carry out professional activities as classified under the Human Resources Ministry’s Malaysia Standard Classification of Occupations (Masco) even if they have less than 5 employees.

Meanwhile, a company representative who wants to be identified as Winston said that employers have no choice as the new RM1,500 rate affects their overhead costs and that it is not cheap.

“Maybe some will look at it as us trying to find a loophole, but can you really foot another RM100,000 when the economy itself is very fluid?” he said.

On the other hand, some companies are also facing a steep increase in other costs such as raw materials and logistics. This was highlighted by SME Association of Malaysia president Ding Hong Sing had in a 2 June report by The Malaysian Insight noting that the new RM1,500 minimum wage rate itself had contributed to a 25% hike in monthly operating costs for businesses.

The Straits Times also reported that the Malaysian Trades Union Congress (MTUC) has described the reduced benefits by some employers as an act of betrayal.

“We have received complaints from employees that companies have deducted allowances and other benefits — including slashing canteen food subsidy and transportation — to reduce cost due to an increase in minimum wage… (it) is a betrayal of the government’s effort to increase the income of the B40 (lower-income) group,” said the group.

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