KUALA LUMPUR, March 6 — The manufacturing sector wants the government to give it time and assistance in increasing productivity to match wage increases under a proposed minimum wage of up to RM1,000.
Sixteen manufacturing associations told reporters today most small-medium enterprises (SME) only had a profit margin of three to five per cent despite paying basic wages as low as RM650 per month.
They said that they could increase their wage bill, which made up an average of 15 per cent of manufacturing cost, only if it was matched by productivity gains.
“Productivity is a function of time. There should be a staggered implementation of minimum wages. If it’s RM1,000, then maybe 10 years, if it’s RM700, then we can do it in a year,” said Lim Kok Boon(picture), president of the Malaysian Plastics Manufacturers Association (MPMA).
Lim, who led the group at the press conference, said that “businesses and workers must be given time to improve productivity through training, acquiring new skills and improving knowledge.”
When asked how this training would be funded, given the low profit margins cited by most manufacturers, he said “we recognise the need to be competitive” but called on the government to assist in training workers as the education system produces workers “that are not so ready for employment.”
He said the MPMA had to lobby “about 20 government agencies” before the Economic Planning Unit gave it a RM3 million grant to develop a new Talent Development Programme (TDP).
“That is the fortunate thing. The unfortunate thing is it will only be ready in the second half of the year and it will take time to train these workers,” he said.
He told The Malaysian Insider later that employers will have to lose these workers from the production line to attend the training sessions, and as such, smaller companies will not have to pay for the programme.
“They have to think of the long-term gain,” he added.
SMEs said at the press conference that up to 80 per cent of operating companies may fold if a blanket minimum wage is introduced.
They warned against a “sudden and substantial increase” in floor wages after the government said a minimum wage policy will be introduced at the end of the month.
The Malaysian Employers’ Federation (MEF) told The Malaysian Insider yesterday that 200,000 companies would be hard-pressed to continue operations if a blanket minimum wage was implemented, putting four million jobs at risk.
The Malaysian Insider reported over the weekend that the Cabinet has agreed to a minimum wage of below RM1,000 for the country, with a RM100 difference between east and west Malaysia, way below the RM1,200 to RM1,500 demanded by workers’ unions.
This prompted the Malaysian Trade Unions Congress (MTUC), the umbrella body that represents 800,000 workers from 390 labour unions, to call for a minimum wage of RM900.
Tun Dr Mahathir Mohamad had said last week Malaysia may become bankrupt as is happening now in the West if the federal government caves in to public pressure and sets a minimum wage policy.
Still influential despite having retired from office in 2003, the former prime minister warned that the federal government’s seeming haste to adopt a minimum wage policy without taking into account the spike in public holidays to include the weekends and the holy days of all major religions was a serious risk to the country’s economy.
“Increasing incomes must raise the cost of production unless there is a corresponding increase in productivity,” he had written in a blog posting.
Despite reaching an accord on a national minimum wage, Human Resources Minister Datuk Seri Dr S. Subramaniam has also backed Dr Mahathir’s concern about the policy impact on the nation’s productivity.
Deputy Prime Minister Tan Sri Muhyiddin Yassin has also said the decision to implement a minimum wage has been carefully studied and insisted “the important thing is to increase productivity so we are on par with developed nations.”
