Focus on Labour Law Reform and Productivity, Not Minimum Wage
Small and Medium Enterprises Association of Malaysia (SAMENTA) calls on the Minister of Human Resources to focus on reforming labour laws to keep up with the gig economy and the reality of a post-pandemic world.
In a statement, it said that the minister has recently said that the minimum wage would be increased to ‘around RM 1,500’ by end of 2022. “While we do not oppose any reasonable increment in the minimum wage, we urge the government to align any such increment to the growth in GDP and labour productivity. Malaysia’s labour productivity declined by 5.6 percent in the third quarter of 2021,” SAMENTA said
SAMENTA said that the way forward for Malaysia and our workforce is to link income to productivity. “The Productivity-Linked Wage System or PLWS, which counts the Ministry of Human Resources as among its champions, is seeing a lot of interest among businesses, including SMEs. However, our labour laws, including the Employment Act 1955, are still time-based, meaning that any attempt at implementing PLWS would have to be on top of a time-based monthly salary, and not instead of it,” it said
It said that In more developed countries, such as Australia, it is common for employees to be paid based on output. Housekeepers in hotels, for example, are paid for rooms cleaned rather than hours worked.
“When occupancy is high, the employees make substantially more and hence gaining a larger share in the business prosperity. This model has worked quite successfully in the ride hailing industry locally, with riders being paid primarily by jobs completed rather than by hours worked,” it said