Report: Some Malaysian employers cut workers’ benefits after wage floor raised to RM1,500

·4-min read
Malay Mail
Malay Mail

KUALA LUMPUR, June 4 — Some workers in Malaysia have complained that their benefits have been or would be reduced by employers in response to the new RM1,500 minimum wage implemented since May 1.

Singaporean newspaper The Straits Times (ST) spoke to office despatch worker Mohamaed Afran, who earned RM1,280 per month over the past one-and-half years, and whose happiness over the RM1,500 new minimum pay rate was cut short after his employer announced an accompanying cut to his benefits.

“My petrol subsidy has been slashed by RM250. On top of that, my leave has been reduced to 14 days from 18, and my medical benefits are fewer. I'm appalled but I need the job,” he was quoted saying by ST.

ST cited sales and marketing executive Maria Fernendez, whose basic salary is RM3,500, as saying that the new RM1,500 rate affects the whole organisation as her employer is also reviewing her benefits.

“My company is... trying to make staff work more days. It expects productivity levels to increase following the 'added cost'. It's not fair,” she was quoted saying.

Prime Minister Datuk Seri Ismail Sabri Yaakob had on March 19 announced that the new minimum wage rate of RM1,500 would be implemented from May 1.

Prior to this new rate of RM1,500, the minimum wage rate was at RM1,200 for areas under city councils or municipal councils, and at RM1,200 for areas not under city councils or municipal councils.

Currently, the RM1,500 minimum wage rate applies from May 1 to employers who have five or more employees, and also to employers who carry out professional activities as classified under the Human Resources Ministry’s Malaysia Standard Classification of Occupations (Masco) even if they have less than five employees.

The new RM1,500 minimum wage rate will only apply from January 1, 2023 for employers with less than five employees, with the RM1,100 or RM1,200 minimum pay rate to continue to apply now depending on where their place of employment is located.

ST also reported a company representative identified only as Winston as saying that employers have no choice as the new RM1,500 rate affects their overhead costs and that it is not cheap.

“Maybe some will look at it as us trying to find a loophole, but can you really foot another RM100,000 when the economy itself is very fluid?' he said.

ST also reported that some companies are increasing their prices to cope with higher costs such as for raw materials and other logistics, also noting that SME Association of Malaysia president Ding Hong Sing had claimed in a June 2 report by The Malaysian Insight that the new RM1,500 minimum wage had contributed to a 25 per cent hike in monthly operating costs for businesses.

ST noted that Malaysian Trades Union Congress (MTUC) had on May 27 described the reduced benefits by some employers as an act of betrayal.

'We have received complaints from employees that companies have deducted allowances and other benefits — including slashing canteen food subsidy and transportation — to reduce cost due to an increase in minimum wage... (it) is a betrayal of the government's effort to increase the income of the B40 (lower-income) group,' ST had quoted MTUC as saying.

On March 21, Malaysian Employers Federation (MEF) president Datuk Syed Hussain Syed Husman had said the new rate of RM1,500 would be an increase of about 25 per cent to 35 per cent of the existing minimum wage rates of RM1,200 and RM1,100 depending on work location.

He had said such a sudden increase of 25 per cent to 35 per cent would put a lot of financial pressure on businesses, especially as most of them are trying to rebuild following impact from lockdowns from the Covid-19 pandemic and the big floods.

MEF had said the minimum wage rate should be increased gradually instead, besides also observing that the RM1,500 new rate would increase costs of doing business and saying that government intervention would be required to ensure sustainability and to stabilise the labour market.

Noting that certain industries such as hotels and tourism are still suffering, MEF had on March 21 said that implementing RM1,500 across all industries would be too taxing and could cause certain industries to close, noting: “The issue is not only the basic RM1500 minimum wages cost. For the businesses it involves many other related matters. It includes levy and housing. Food, EPF, Insurances and other benefit to mention a few. The net cost of doing business is much more than what it looks.”