SME group: Re-weigh minimum wage plan; introduce goods and service tax instead

JOHOR BARU: Small and medium enterprises (SMEs) want the Government to reconsider the implementation of the minimum wage scheme from all angles to avoid serious implications. SMI Association of Malaysia national president Teh Kee Sim said the association did not see why there was a rush to implement the scheme for the private sector.

Source from (The Star Online): http://biz.thestar.com.my/news/story.asp?file=/2012/11/5/business/12227765&sec=business
Published: November 05, 2012

Teh says minimum wage should be linked to productivity level.

“Even after 10 long years since the goods and service tax (GST) was proposed, it has yet to take place, but why it only took two years to implement the minimum wage,'' he said in an interview with StarBiz.

Teh said instead of pushing the private sector to adopt the scheme, the Government should first introduce the GST as the system would bring revenue to the Government's coffer.

He claimed that small-time employers, SMI associations, chambers of commerce and non-government organisations (NGOs) were not consulted on the minimum wage scheme.

“It seems that the National Wages Consultative Council (NWCC) is the one that is making the recommendations to the Government on (the scheme) behalf of us,'' alleged Teh.

He claimed although there was not concrete structure on the minimum wage, it was passed by Parliament in July last year. Teh said the SMEs had approached the Human Resources Ministry and the International Trade and Industry Ministry to express their concerns and worries on the scheme but did not get any feedback or solutions on the matter.

He said the Government did not address the issue of the minimum wage at the tabling of Budget 2013 in Parliament on Sept 28.

The minimum wage for the private sector employees has been set at between RM800 and RM900 per month.

The RM900 is for employees in the peninsula while the RM800 is for workers in Sabah, Sarawak and the Federal Territory of Labuan.

It covers employees in all economic sectors except those in the domestic service sector such as maids and gardeners.

The rates will take effect six months from the date the Minimum Wage Order is gazetted.
Teh said although micro-enterprises had been given another six months extension before the scheme takes place in January next year, response from them was lackluster.

He said only 4,500 out of 645,000 SMEs nationwide had applied for extension on the closing date on Oct 1. Teh said this did not mean the remaining 640,500 SMEs, which did not apply for the grace period, agreed to the minimum wage and would implement it in January.

He said the SMEs did not bother to apply for extension as they found the process too tedious involving too many paperwork such as giving the sales forecast and breakdown on operating expenditure.
“These figures are confidential to us and a trade secret. What happens if the papers fall into the hands of unscrupulous parties,” asked Teh.

He claimed another reason was that most of the SMEs already have the notion that their applications would be rejected as the Government did not want to “listen and consider” their views on the minimum wage in the first place.

He said the SMEs were not against the scheme and supported Malaysia's vision to become a high-income nation by 2020, but was unhappy with the way the issue was handled.

Teh said minimum wage should be linked to productivity level, workers' knowledge and skills and attitude. “Out of the 13 million workers in the country now, only 3.3 million earn below RM750 monthly including two million legal foreign workers,' said Teh.

He said on the other hand, the 645,000 SMEs nationwide operated by between three to four million owners who were family members, employed seven million employees.