‘Minimum wage increase needs more study’

M. Kulasegaran

KUCHING: The Sarawak Oil Palm Plantation Owners Association (Soppoa) has expressed support for the proposed new minimum wage structure but hopes the Ministry of Human Resources will consider a few pointers when a review is due soon.

Soppoa, in a press statement yesterday, said the association is not against any reform of the minimum wage structure set by the government as it was done with good intentions and for the progress of the country.

“However, a fundamental consideration that the National Wage Consultative Council must put serious thoughts to is that of the productivity in line with the increase in wage structure,” the statement said.

“It is impractical for any country to just increase wages without having some corresponding increase in productivity as this will not improve the nation’s growth but instead pulls down the overall efficiency of the country,” it added.

The statement came following announcement by the Human Resource Minister M. Kulasegaran recently on reviewing the minimum wage by August 2018.

Kulasegaran mentioned that the new increase will not be as high as that promised in the Pakatan Harapan’s election manifesto (which was RM1,500) apart from standardising minimum wage across the whole country.

Currently, the minimum wage for Peninsular Malaysia is RM1,000 while for Sabah and Sarawak is RM 920.

A number of oil producing nations, Soppoa observed, have in the past increased their workers’ wages without seeing any increase in productivity which eventually led to the demise of their economies and huge inflation resulting in poverty.

“Such a scenario must not occur in Malaysia and so it is imperative that productivity increases must be in tandem with wage increases. Only in this way will the nation be able to progress in a meaningful and productive cycle of increasing productivity with increasing wages,” it reminded.

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Another consideration with regards to the proposed increase in wages, Soppoa elaborated, was the purchasing power of the people.

“Increase in wages for the workers that results in the inflation of prices for goods and services will be detrimental to the economy of the country, a scenario that also should not happen here.

“The government has to ensure that there will not be a mad rush by producers of goods and services to correspondingly increase their prices when the new wage structure had been implemented as then the purchasing power of the people will not increase. Worse, it could even be negative should the increase in prices of goods and services outpace the increase of wages,” it warned.

Soppoa urged the ministry to carefully study the proposed increase in minimum wages and impacts on SMEs (small and medium enterprises) to ensure that these will not be negatively affected by the proposed increase in minimum wages.

“As such, Soppoa would like to caution the ministry on these concerns and to address these issues as part and parcel of the proposed wage increase structure.”

Like all concerned parties in the country, Soppoa requested that proper consultative dialogues be carried out with all stakeholders prior to any decision on the proposed wage increase.

This is particularly so for plantation sector where more than 30 per cent of the cost are made up of wages in order not to have a negative impact on the competitiveness of palm oil in the international oil and fats market.

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