Will RM1,500 minimum wage burden small Malaysian firms?

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The RM1,500 Minimum Wage May Burden Smaller Malaysian Firms, With Suggestions for Mitigation

The proposed RM1,500 minimum monthly wage, slated to take effect on May 1, 2022, may present significant financial challenges for smaller businesses in Malaysia, particularly those located outside major urban centres. Bangi MP Ong Kian Ming has urged the government to consider these impacts and has put forth several policy suggestions to alleviate potential burdens and create a more comprehensive labour policy reform package. These proposals aim to address concerns about affordability for rural businesses and the overall structure of foreign worker employment.
Consideration for Differentiated Minimum Wage Outside Urban Areas

Ong Kian Ming has suggested that the government should consider implementing a lower minimum wage for non-town and city areas, proposing RM1,400 as an alternative to the RM1,500 figure. This recommendation stems from the observation that many smaller firms in rural regions may struggle to manage the substantial increase from the current RM1,100 minimum wage for non-city areas. The economic disparities between major urban centres and more remote locations could mean that a uniform RM1,500 wage might be disproportionately difficult for businesses in the latter to absorb.
Alternative Minimum Wage Structures and Foreign Worker Levy System

As an alternative or complementary measure to the monthly minimum wage, Ong proposed the establishment of a minimum hourly wage rate. This would offer businesses and employees flexibility, allowing them to choose the structure that best suits their operational needs and earning potential. Furthermore, he advocated for a transparent and open multi-tiered levy system for hiring foreign workers. Under this proposed system, companies would face a progressively higher levy for employing a larger proportion of foreign workers, potentially encouraging a more balanced workforce composition and generating revenue for the government.
Direct Hiring of Foreign Workers and Support for Smaller Businesses

Ong also recommended that companies should be permitted to hire foreign workers directly, thereby removing the intermediary role of agencies and placing greater responsibility on employers for the welfare of their staff. This is part of a broader set of suggestions that include ensuring proper accommodation for new foreign workers, allowing verified refugees to be employed, and permitting employers to hire expatriates without necessarily using the MyFutureJobs portal. Additionally, he proposed the implementation of wage subsidies specifically targeted at smaller companies to help them manage the increased labour costs.

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Will RM1,500 minimum wage burden small Malaysian firms?

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