The Sarawak Bank Employees’ Union (SBEU) said it is disappointing that groups such as the SME Association of Malaysia have resorted to repeated “fear mongering and incoherent rhetoric” about widespread business closures following the implementation of the new minimum wage next February.
In a statement, it said it is a misconception that the minimum wage has led to an increase in the prices of goods. It said prices have been rising even before the current minimum wage of RM1,500 was implemented in May 2022.
The union also challenged struggling SMEs to disclose their full tax accounts to prove that the RM200 rise in operational costs – from a RM1,500 minimum wage to RM1,700 – could push them into insolvency.
“If it is indeed true, we will petition the government to reduce the minimum wage,” said its CEO, Andrew Lo.
“Businesses that cannot even pay a minimum wage that is below the poverty line income (RM2,589) have no business to be in business. They should close shop.
“We wish to point out that in the past, employers claimed that the minimum wage will cause 300,000 businesses to close. It is a blatant misrepresentation.”
Lo also noted that Malaysia’s labour income share is 32%, which is much lower than regional peers of between 45% and 55%.
According to the Organisation for Economic Cooperation and Development (OECD), labour income share refers to the portion of the national income that goes to labour compensation.
The SME Association of Malaysia said yesterday the expected increase in operational costs resulting from the raising of the minimum wage and the proposed mandatory EPF contributions for foreign workers may lead to some businesses folding.
Its president, Chin Chee Seong, said “fragile” businesses were still recovering from the impact of the Covid-19 pandemic, and they would be unable to absorb the rise in operational costs or pass them on to customers.
Tabling the 2025 budget on Friday, Prime Minister Anwar Ibrahim announced that the government would raise the minimum wage to RM1,700 a month starting Feb 1.
Anwar, who is also the finance minister, said the new rate would only apply six months later, from Aug 1, for employers with fewer than five workers.