Why are over 50,000 workers still paid below RM1,500 minimum wage?

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Over 50,000 Workers Remain Below RM1,500 Minimum Wage Due to Contractual Issues and Enforcement Challenges

More than 50,000 workers across Malaysia continue to be paid less than the mandated RM1,500 minimum wage, with a significant number of these cases involving employers holding government contracts. These employers often cite unrenewed or unreviewed contracts as the reason for adhering to previous wage scales, while enforcement is hampered by companies that are difficult to locate. The minimum wage of RM1,500 per month for employers with five or more workers was implemented nationwide effective May 1 last year under the Minimum Wage Order 2022.
Government Contractual Obligations Cited as Reason for Non-Compliance

A substantial portion of employers failing to meet the RM1,500 minimum wage are firms undertaking government projects. These companies frequently argue that they are bound by the terms of their existing, unrenewed, or unreviewed contracts, which stipulate the previous minimum wage of RM1,200. This contractual dependency is a primary reason cited for their inability to implement the higher wage, particularly impacting those in the cleaning and servicing sectors that frequently work for the government.
Enforcement Difficulties Due to Elusive Employers

Enforcement of the minimum wage policy is complicated by the existence of enterprises that can easily evade detection. Some employers provide false addresses, making it challenging for enforcement officers to locate the companies and take necessary action. This tactic is reportedly used by some employers, particularly within sectors like cleaning and servicing, to avoid accountability for non-compliance.
Specific Industries and Historical Wage Arrears Highlighted

Employers in the cleaning and servicing industries, especially those with government contracts, appear to be most affected by the minimum wage non-compliance issues. There are instances where arrears dating back to 2019, when the minimum wage was RM1,100, remain unpaid. The Malaysian Trades Union Congress (MTUC) has pointed to specific cases, such as one in Seremban, Negeri Sembilan, where tracing employers has proven difficult.
Proposed Solutions for Future Government Contracts

To address these persistent issues, suggestions have been made to award government contracts exclusively to concession companies. The rationale behind this proposal is that concession companies are typically larger entities with established boards of directors, making them more traceable and accountable. This would allow for more effective action to be taken against them in cases of any breach of contractual or wage obligations.

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Why are over 50,000 workers still paid below RM1,500 minimum wage?

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