TLDR: Full video explainer obtainable beneath!
As of Might 1, 2022, the minimal wage in Malaysia is RM1,500, a rise from the earlier RM1,200, which was the usual since February 1, 2020. This modification applies to government-linked firms and personal sector firms with a minimal of 5 staff.
Since it might be difficult for micro, small, and medium-sized enterprises (MSMEs) to instantly adhere to the brand new minimal wage, they are going to be given further time earlier than having to adjust to it.
In keeping with Datuk Seri M. Saravanan, the Minister of Human Assets, the exemption for MSMEs will final for about two years.
Whereas the 25% leap is unquestionably trigger for celebration, how does the increment actually have an effect on the native workforce, employers, and the financial system? Listed here are some execs and cons of the RM1,500 minimal wage.
1. Higher high quality of life
Based mostly on authorities knowledge launched in January 2022, the native shopper value index (CPI) rose 3.2% in December 2021 in comparison with 2020, attributable to an elevated value of meals and gas.
Given these hikes, the rise within the minimal wage would supply a extra balanced earnings for Malaysians.
2. Higher financial progress
The elevated minimal wage means workers will be capable to sustain with the requirements of residing, since they’ll have extra spending energy.
This could then result in greater consumption, which in flip results in financial progress.
1. Increased costs of products and providers
Not all employers would be capable to meet that commonplace and pay a further RM300 each month to every underpaid worker. After all, there may be nonetheless a while earlier than companies must up their wages as per the brand new minimal wage, however it may nonetheless be a problem.
Employers may also have to supply increments to present workers who might already be incomes above the minimal wage as these workers might anticipate a lift in remuneration attributable to seniority and expertise.
In the end, this would possibly result in greater costs of products and providers to make up for the revenue margin.
2. Corporations might downsize
If firms are unable to maintain up with the elevated wages, they could find yourself having to downsize and cut back labour prices.
That is worrying as it might contribute to the unemployment price in Malaysia, which nonetheless hasn’t gone again to the pre-pandemic determine, which was 3.3% in 2019.
3. The leap would possibly worsen the financial system
The Malaysian Employers Federation (MEF) stated that the RM1,500 minimal wage would solely profit international staff.
The argument relies on the belief that the employees would find yourself sending extra money again residence as an alternative of spending the earnings in Malaysia.
The way forward for Malaysia’s minimal wage
Some expressed confusion over the brand new nationwide minimal wage as a result of the previous minimal wage had stipulated a two-tiered method.
Whereas city districts fell below the minimal wage of RM1,200, rural districts got a minimal wage of RM1,100.
Having a better and standardised minimal wage of RM1,500 now might be useful, particularly in a time the place the value of products and providers appears to at all times be rising.
However, it’s nonetheless vital to contemplate how the rise will influence the financial system within the larger image.
Watch our video the place we go extra in-depth on the professionals and cons of the RM1,500 minimal wage right here:
- Learn different salary-related articles we’ve written right here.