Enforcement of minimum wage policy in Malaysia, preliminary findings on the sentiments of micro, small and medium enterprises

• Main Authors: Wee Yu Ghee, Mohd Rosli Mohamad, Noraani Mustapha, Sharan Kaur
• Format: Non-Indexed Article
• Published: 2013
• Online Access: http://discol.umk.edu.my/id/eprint/7913/; http://www.savap.org.pk/journals/ARInt./Vol.4(6)/2013(4.6-39).pdf

After storming through decades of debate, on the eve of Labour Day 2012, the Prime Minister of Malaysia announced the floor wage of RM900 (equivalent to USD300) and RM800 (equivalent to USD267) per month for Peninsular and East Malaysia respectively. Many employees, especially unskilled workers who live below the poverty line (earning less than USD250 per month) were overjoyed. However, such move has also invited concerns from various parties and even outraged small and medium enterprises (SMEs) which for see the increase in operational costs, unemployment and even possible close-downs. This paper seeks to gather the opinions from micro, small and medium enterprises in Malaysia over the new wage policy and determine if the decided rate is acceptable, and most significantly, will these SMEs comply starting 2013? Two sessions of focus group discussion involving 20 entrepreneurs were conducted. Although majority of the entrepreneurs agree that such intervention helps to alleviate poverty, many voiced concerns over detrimental effects in the long run which include rise in local unemployment, heavy reliance on foreign workers, hike in inflation rate, increase in operating and labour costs, and even issues of differential in minimum wage between Peninsular and East Malaysia, whereby the latter reports higher costs of living. Many countries have practiced minimum wage policy - some single minimum wage and others multiple, vary according to location, industry and sector and even performance-based. By collecting opinions from SMEs, this research aims to propose a win-win and feasible model of minimum wage enforcement that benefits both SMEs and workers at large. The findings from this research which structure the views and feedback accordingly by region, state, industry and sectors will be useful not only to all SMEs but also to the National Wage Consultative Council and the Ministry of Human Resources.