Minimum Wage Should Reflect Regional Realities, Says Ngu

KUCHING (Oct 4): Minimum wage policies should reflect regional economic realities than adopt a uniform nationwide rate that could burden rural businesses, said Datuk Dr Ngu Piew Seng.

The Federation of Sri Aman and Betong Chinese Associations and the Simanggang Chinese Chamber of Commerce and Industry president said factors such as cost of living, business size, revenue and productivity should be considered before any move to raise the minimum wage from RM1,700 to RM2,000.

He stressed that he was not opposed to higher wages, but said businesses in smaller towns and rural areas operated under vastly different conditions from those in major urban centres.

Citing a recent survey showing that 45.9 per cent of micro, small and medium enterprises (MSMEs) opposed the proposed increase, Ngu said a ‘one-size-fits-all’ approach could disproportionately affect businesses in towns such as Sri Aman, Sarikei and Betong.

“While RM2,000 might not be considered high in Kuala Lumpur and the Klang Valley, the current rate of RM1,700 is already placing a significant burden on MSMEs in rural areas like Sri Aman,” he said in a statement on Saturday.

Ngu pointed out that Malaysia had previously applied different minimum wage rates according to region.

“Under the Minimum Wages Order 2012, implemented in 2013, the monthly wage was set at RM900 per month for Peninsular Malaysia and RM800 for Sarawak, Sabah and Labuan.

“The rates were further raised in 2016 to RM1,000 for Peninsula Malaysia and RM920 for Sarawak, Sabah and Labuan.”

Ngu said the precedent showed that wage policies could take into account the economic conditions of different regions rather than applying a single rate across the board.

He said many food outlets, home-based businesses and MSMEs in Sri Aman generated monthly revenues of only a few thousand ringgit, compared with considerably higher turnovers among similar businesses in Kuala Lumpur and the Klang Valley.

Requiring businesses with vastly different revenue, operating scale and profitability to shoulder the same wage costs would be unrealistic, particularly for rural MSMEs, he said.

“We certainly hope employees can earn better incomes and live with greater dignity, however, if policies are formulated without considerations for practical realities, MSMEs might end up downsizing or even facing closure, ultimately leading to employees losing their jobs,” he said.

Ngu urged the government to consider a more flexible wage mechanism based on regional economic conditions, cost of living, business size, industry and employee productivity.

“It is not a question of whether the minimum wage can be raised, but rather how and when this should be done, and what methods are appropriate for different regions,” he said.

He also welcomed the government’s recent decision to exempt MSMEs from the new minimum wage, saying the move would help ease cost pressures and reflected its willingness to consider industry concerns.

Ngu said MSMEs remained a vital part of the economy and an important source of grassroots employment.

While safeguarding workers’ incomes was important, he said this had to be balanced against ensuring businesses remained viable and capable of creating jobs.

“When formulating future wage policies, the government should gain a deeper understanding of the actual operating environment faced by MSMEs in Sarawak, Sabah, and other rural areas,” he said.

He added that ensuring business survival, sustainability and growth was crucial to creating more employment opportunities.

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