PETALING JAYA: The Malaysia Retailers Association (MRA) has appealed to the government to review and stagger the 25% increase in minimum wage for the industry.
It warned that the minimum wage hike, which is due to come into effect on May 1, 2022, will result in spiralling inflation due to the drastic increase in labour cost that will lead to a lower standard of living for the average consumer.
“Managing the drastic increase of minimum wage might lighten the additional inflationary pressure which is already happening due to hikes in prices of raw materials and transportation cost,” the association said in a statement.
It opined that further analysis needs to be carried out on the impact of the wage hike without any corresponding increase in productivity or output, as it will lead to a hefty jump in operating expenses and the inflationary impact will be quite heavy.
MRA believes any increase in wages should be in line with an increase in productivity and output to enable businesses to absorb the higher wages without drastically raising the cost of doing business.
“Businesses should be allowed to include in the minimum wages all incentives and commissions and allowances that they pay to their workers in tandem with their industry practices to be able to attract and retain workers while maintaining or improving their business profitability and viability overall,” it said.
MRA pointed out that the retail industry is still struggling to recover from the impact of Covid-19, despite the reopening of economic sectors announced in September 2021.
It said the impact from the RM300 hike in minimum wage will devastate the struggling businesses which are already burdened with high labour costs along with all the statutory contributions.
MRA said many businesses had seen a slowdown prior to the pandemic and the outbreak brought many retail businesses, particularly those in the non-essential sectors, to their knees.
In addition, it highlighted that the banking sector has scaled back loans and trade facilities to the sector, leading many businesses to scale back and downsize which translates into less employment.
MRA called for immediate retail stakeholder engagement, especially with the National Wages Consultative Council under the Ministry of Human Resources, to explain why hike must be done in a more gradual manner.
It said the government must also take into consideration the variable cost of living in different parts of the country.
MRA opined that the minimum wage increases over the last decade have not had a positive impact as businesses were forced to cut their workforce and the remaining workers to increase their work.
“Compounded with Covid-19 lockdown measures when many businesses were forced to close temporarily, there was a sharp increase in unemployment,” it said.
Consequently, many are forced to take up casual employment via the gig economy, which does not give long-term growth or security to them nor ensure a steady future.
“The government needs to enable businesses to restart and expand their businesses and provide steady regular employment rather than just focus on the minimum wages. The government needs to do all it can to stem inflation, not increase it.”
Source: The Sun Daily
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