KUALA LUMPUR (June 3): The government’s move to raise the minimum wage to RM1,500 a month should have been restricted to urban areas, an economist said on Friday (June 3).
In a virtual briefing on the market outlook, AmBank Group chief economist Dr Anthony Dass said the minimum wage implementation should not be in a one-size-fits-all approach but according to regions in the country.
Dass said the salary increment should come from creating more value-adding jobs that in turn help the country to become more self-sufficient.
“We have to start becoming more self-sufficient, creating more value-adding jobs that can actually see the salary rising up.
“Seeing the RM1,500 minimum wage implementation, I heard that the majority of foreigners are benefiting. We cannot have one policy to fit everybody.
“Can you imagine running a business in Perlis, maybe in a village near Kahang, putting a RM1,500 salary which is equivalent to earning RM4,000 to RM5,000 in Kuala Lumpur. The minimum wage as a one-size-fits-all policy is bad. We should go according to the region,” he said.
Dass suggested that the government look into improving the value of workers, where salary increases would be compensated with better productivity.
The economist was responding to a question on the possibility of a 25% to 30% price hike by small and medium enterprises in the wake of the minimum wage increase which came into effect on May 1.
He said this would see the cost of living go up as the transfer of prices takes place for businesses, along with a decline in disposable income following the lower purchasing power of consumers.
Businesses would struggle if they do not raise prices as the cost will bite into their cash flow, while the solution of providing subsidies is only a stop-gap measure.
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