On April 30, 2012, Malaysian Prime Minister Datuk Seri Najib Tun Razak announced the minimum wage for workers in private sector in Penninsular Malaysia has been set at RM900 a month or RM4.33 per hour, while for Sarawak, Sabah, and Labuan, the minimum wage is RM800 per month or RM3.85 an hour.
The minimum wage will take effect six months from the date the minimum wage order is published in the gazette but micro business with five employees or less such as industrial business with annual sales of RM 250,000 and farm and service business with annual sales of 200,000 will be given an extra 12 months to implement the new wage. The move is part of the government’s plan to transform Malaysia into a high income country by 2020.
The Malaysian Prime Minister said the announcement of the country’s first minimum wage aims to solve poverty in the working class and to ensure that workers could handle a soaring cost of living in the future.
However, some see the announcement of the country’s first minimum wage as an election gimmick designed to appeal voters as Malaysia is set to hold a general election in June. Earlier on, the Malaysian Prime Minister also announced that civil servants would receive a pay rise. These measures are seen by many as the government’s move to solidify its popularity before the election.
Reactions to the introduction of the country’s first minimum wage by labour-market and economic related agencies also vary, with secretary-general of Malaysia’s Chamber of Commerce and Industry viewing that the minimum wage of RM900 a month in Penninsular Malaysia will bar foreign investors from investing in the country, especially in rural areas.
The secretary-general of Malaysia’s Chamber of Commerce and Industry suggested the minimum wage should be set for each specific area.
Having waited for more than 10 years, president of Malaysian Worker Union, meanwhile, expressed his delight following the government’s introduction of the minimum wage. He also announced that the union would try to press ahead for payments of RM300 additional allowance for workers as they believe the cost of living will increase after the wage adjustment.
Director of Malaysia Employers’ Federation said the introduction of the minimum wage comes too soon while employers should be given more time to comply. He suggested minimum wage hike should be carried out with skill standard to benefit all parties.
CIMB researchers said the introduction of the minimum wage might affect companies’ profit in a short-run but it will do good for them in the long run, especially industrial companies, as they will have to adjust their manufacturing process by using more advanced technology and trying to rely less on unskilled workers.
The minimum wage will cover all workers in private sector, including foreign workers, but will except domestic maid.