News & Events

[ 29-03-2013 ]
Adapt to minimum wage, SMEs advised

JOHOR BARU: Small and medium enterprises (SMEs) have been urged to start adjusting and adapting their operations when the payment of minimum wages to foreign workers comes into effect on Jan 1, 2014.

SMI Association of Malaysia national president Teh Kee Sin said they had to take into account the extra costs in their operations with the implementation of the minimum wage scheme.

“Our SMEs only have nine months to go, and this period is rather crucial as to whether they would be able to adjust and adapt to the new ruling, or continue grappling with escalating operating costs,'' he told StarBiz.

Teh said the SMEs that had already paid their foreign workers the minimum wage, effective Jan 1, 2013, would consider the January and February salaries as “bonuses”.

The National Wages Consultative Council (NWCC) had on Tuesday issued a statement that the SMEs would not have to pay the minimum wage to their foreign workers until Dec 31.

The SMEs are not allowed to make any deductions on levies, accommodation and other allowances from the salaries of their foreign workers.

However, the SMEs have to abide by the law which requires them to pay the minimum wage to Malaysian workers.

The minimum wage for private-sector employees has been set at between RM800 and RM900 per month.

The RM900 is for employees in the Peninsula, while the RM800 is for workers in Sabah, Sarawak and the Federal Territory of Labuan.

It covers employees in all economic sectors, except those in the domestic service sector such as maids and gardeners.

He said the SMEs were glad that the Government had listened to the proposal made to them via their associations to defer the payment of minimum wages for foreign workers.

“It might not be a good solution, but the best solution for us for the time being,'' said Teh, who is also the chairman of the South Johor SME Association.

He said hopefully, in the near future, the Government and the relevant agencies would listen to the voice of the SMEs pertaining to SME matters and not only to the NWCC.

Teh claimed that small-time employers, chambers of commerce and non-governmental organisations had not been consulted on the minimum wage scheme.

He said it seemed that the NWCC was the one that was making the recommendations to the Government on the scheme on behalf of the SMEs.

“With the minimum wage scheme already in place, the cost of doing business has gone up and we have not much choice but to pass it on to consumers,'' added Teh.

He said the only way for the SMEs to reduce the labour cost in their operations was to automate their operations, as it would help to offset the hike in operating costs.

Teh added that the Government could assist the SMEs by introducing soft financing loans for them to switch to automation, or to upgrade their current machinery to help improve productivity.

He said while the SMEs supported the move made by the Government on the scheme, at the same time, many of the SMEs in the second- and third-tier towns were not prepared for it. “Nobody would want to work with SMEs in Johor Baru, Penang or Kuala Lumpur if they are not paid RM900 or more, but how about SMEs in smaller towns?'' asked Teh.

He said many of the SMEs in the smaller towns hired senior citizens and pensioners and could only afford to offer a RM500 monthly salary, as the cost of living was low.