MINIMUM WAGE OK BUT MAY CAUSE INFLATION – FSM

Minimum wage OK but may cause inflation – FSM

KOTA KINABALU May 3, 2012: Factors affecting the cost of living such as shipping and production costs have to be solved for the minimum wage to be meaningful.

Federation of Sabah Manufacturers (FSM) president Datuk Seri Panglima Wong Khen Thau also urged relevant parties not to increase the price of goods following the implementation of minimum wage as this would mean workers could not enjoy the benefits of their minimum salary.

He was commenting on Prime Minister Datuk Seri Najib Tun Razak’s announcement of the minimum wage on Monday, that is RM 900 a month for Peninsular Malaysia, and RM 800 per month for Sarawak, Sabah and Labuan.

The minimum wage will take effect six months from the date the minimum wage order is gazetted, but micro enterprises are given a grace period of 12 months.

Wong deemed the quantum of minimum wage for Sabah ‘acceptable’ at this point of time, as well as allowing employers who are genuinely unable to implement the minimum wage to apply for an extension of the transition period.

Nonetheless, he raised concerns over more expensive products and services following the implementation of minimum wage, as this would mean the purchasing power of the people would remain the same.

“Personally, I believe there is a need for minimum wage; we are talking about decent living. But what worries us is whether the minimum wage would cause inflation. If it does, then the minimum wage doesn’t really help the employees,” he pointed out.

Wong said factors such as the cabotage policy, cost of doing business in Sabah, cost of production including cost of goods and amenities, have to be looked into as these affect the cost of goods in Sabah.

“If cost of goods keep increasing, raising the salary is not a long term solution.”

On the RM100 difference in minimum wage between East and West Malaysia, Wong said salary in Sabah had always been lower than our counterparts in Peninsular Malaysia.

By right the minimum wage in Sabah should be higher due to our cost of living, he said, but this would have a big impact on the sustainability of businesses in Sabah.

He said the average income in Peninsular Malaysia is RM 1,371, Sarawak RM 782 and Sabah RM 577.

This means that the minimum income of RM 900 would not have a great impact on enterprises in Peninsular Malaysia, but an increment of RM 200 in Sabah could affect employers.

“If the increment is too high, a kopitiam may not be able to afford to pay its workers. When a businesses cannot sustain, it may have to lay off more workers or ultimately close shop,” he explained.

He said the minimum wage must be a win-win situation to both employers and employees, adding that he believed the government would adjust the minimum wage structure in the next two or three years.

With the implementation of minimum wage, Wong also hoped that workers would be encouraged to increase their productivity.

On the other hand, Joanna Chai stressed that the minimum wage should be the same both in East and West Malaysia, if not higher in Sabah due to the living cost here.

Under the 1Malaysia concept, she pointed out that there should not be any difference in the minimum wage.

“Have they (the government) studied the cost of living in Sabah? If they think the cost of living is lower, show us the statistics,” she said.

She added that one plate of noodles now costs RM 7 here, as well as basic necessities such as fish, which is around RM 15 to RM 20 per kg, chicken RM 19 per kg, and vegetable around RM 7 per kg.

“Are you comparing the standard of living in Kuala Lumpur and Sabah, or the northern states such as Kedah or Kelantan to Sabah?

“Minimum wage here should be higher. However, it is not higher but even lower.”

by Chok Sim Yee