Malaysian International Chamber of Commerce and Industry (MICCI) said businesses would have to bear a bigger cost as employers were already paying extra EPF contributions since the minimum wage was increased from RM1,200 to RM1,500.
“This is detrimental to businesses as it means a hike in the cost of doing business for employers,” MCCI executive director Shaun Cheah told FMT.
“It will be a double whammy for employers because the new minimum wage has already led to an increase in their contribution to EPF.”
Cheah said the proposal would further burden companies if they were not able to pass on the additional cost to the consumers.
“Businesses that can pass the additional cost to the consumers will put pressure on the inflation rate and cost of living,” he said, adding that the proposal would also affect the competitiveness of those exporting their products.
On Sunday, Prime Minister Anwar Ibrahim said the government would discuss a proposal to increase the employers’ EPF contribution following demands from various unions for an increase to boost the employees’ retirement funds.
Employers currently contribute 13% for workers earning RM5,000 and below, and 12% for those earning above RM5,000. Employees contribute 11%. The statutory contribution rate is subject to changes by the government.
Malaysian Employers Federation president Syed Hussain Syed Husman said the plan to increase the employers’ EPF contribution was unfair. He said EPF contributions must be sourced equally from both employers and employees.
“Any increase in EPF contributions must be from both employers and employees because EPF contributions are a collective responsibility,” he said.
Uni Malaysia Labour Centre (Uni-MLC) had reportedly urged the government to increase the employers’ EPF contribution to 20% from the current 13% for those earning RM4,000 and below.
SME Association of Malaysia secretary-general Chin Chee Seong had also previously said it would place a significant burden on small and medium-sized enterprises, particularly with the recent inclusion of overtime pay entitlement for employees earning up to RM4,000.
Chin said his association objected to the proposal as many SMEs were still recovering from the impact of the Covid-19 pandemic.
“Negative consequences could arise if small and medium-sized enterprises, which employ over 40% of the country’s workforce, are not doing well and face extra costs,” he said.
“Ultimately, this could further harm the economy.”
Small and Medium Enterprises Association of Malaysia (Samenta) chairman William Ng also urged the Cabinet to reject demands to increase the employers’ EPF contribution. He said the focus should be on creating more higher value jobs and industries instead.
Ng said a responsible government “cannot keep being held hostage by opportunistic groups”.
He said Putrajaya must encourage Malaysians to better manage their finances as well as to protect small and medium-sized enterprises “at all costs”.